The gold price has soared past the $2700 mark for the first-time, driven by the expectation of further monetary ease and the increased demand for safe havens amid geopolitical uncertainty surrounding the US Presidential elections and the ongoing Middle East conflict.
On Friday, gold spot rose 0.6%, reaching $2,709.81 an ounce. It had earlier reached a record high of $2.714.
The bullion price has risen by over 2% this week, and US gold futures have increased by 0.7%, to $2,725.
The price of gold is rising due to geopolitical tensions
Analysts attribute the upward trend of gold to geopolitical tensions, which are driving investors towards safe-haven investments.
“The markets are still looking at geopolitics and overnight developments in the Middle East fuel uncertainty,” Rhona Connell, an analyst with StoneX, told Reuters.
Investors are more concerned about the conflict in the Middle East after recent statements by the militant Hezbollah group of Lebanon and Benjamin Netanyahu, Israeli Prime Minister.
The rise in gold prices is a reflection of a strong tendency among traders, especially from Asian markets.
Reuters quoted Ross Norman, an independent analyst: “Gold’s breakout past the psychologically important $2700 mark during Asian Trading Hours suggests that speculative interests are peaking.”
He said that the gold market is booming, and seems to be ignoring factors like declining inflation or Treasury yields.
Gold price: more rate cuts by major central banks
Gold’s impressive increase of 31% in this year is largely due to the prospect of more easing measures by major central banks including the US Federal Reserve and ongoing geopolitical pressures.
Dealers in India reported that they were offering discounts on the physical market due to the drop in demand caused by record high prices, particularly ahead of an important festival.
Analysts believe that gold may face resistance at around $2,750 if its upward trend continues.
Frank Watson, an analyst at Kinesis Money commented: “Should the gold price continue its upward trend, it could encounter resistance around $2,750 per ounce. This is the upper limit of the rising channel that we have observed since late July.”
Gold’s appeal as a safe haven asset is not diminishing as geopolitical tensions increase and monetary policy remains uncertain. It has become a dominant market force.
ING, a major banking company, said that “we believe the macro-picture combined with the safe-haven demands amid an escalation in tensions in the Middle East as well as the ongoing conflict in Ukraine will push gold to new heights.”
This post Gold crosses 2,700 dollars for the first time. What’s driving the yellow metal surge? The ICD published the first article, Gold crosses $2700 for the first time: What’s driving this surge in yellow metal?
This site is for entertainment only. Click here to read more
