Spot gold currently trades at 4,011 USD per ounce. Gold futures reached the 4,000 USD mark on the evening of 7/10, now standing at 4,025 USD.
Since the beginning of the week, the spot price has risen by over 120 USD per ounce. The market saw an upturn as investors sought safe haven assets amid economic and political volatility, coupled with expectations that the US Federal Reserve (Fed) would continue to cut interest rates later this month.
Gold is widely regarded as a store of value during periods of instability. The spot price has increased by 52% since the beginning of the year, following a 27% rise last year.
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Global spot gold prices have risen consistently over the past few sessions. *Chart: Kitco* |
"The market is now so confident that it anticipates the next milestone to be 5,000 USD, as the Fed continues to lower interest rates", stated Tai Wong, an independent metals investor in the US. He cautioned that some corrections might occur, such as a potential ceasefire in the Middle East or Ukraine. However, the underlying drivers for precious metals, including rising debt, demand for reserve diversification, and a weak US dollar, are unlikely to change in the medium term.
The US government has been shut down for seven days. This has delayed the release of several key economic figures, compelling investors to rely on secondary data to forecast the timing and extent of the Fed's interest rate cuts. At its meeting later this month, the Fed is expected to cut rates by an additional 25 basis points (0.25%). A similar move could follow at the December meeting.
Additionally, political instability in France and Japan has also boosted demand for safe haven gold. The fear of missing out (FOMO) sentiment further accelerated market momentum. "Investors are consistently buying gold, even at high prices. This amplifies the effect", observed Giovanni Staunovo, an analyst at UBS.
Other precious metals also saw price increases: Silver rose by 0.5% to 48 USD per ounce, platinum climbed 2.2% to 1,653 USD, and palladium gained 1.3%, now trading at 1,355 USD.
Ha Thu (according to Reuters)
