By Swann Collins, investor, writer and consultant in international affairs – Eurasia Business News. December 10, 2024. Article 1327.
Gold prices reached a two-week high on Tuesday, driven by escalating geopolitical tensions and expectations of a potential U.S. interest rate cut by the Federal Reserve next week. Spot gold increased by 1.3%, trading at $2,692.32 per ounce, while U.S. gold futures rose 1.2% to settle at $2,718.40.
The surge in gold prices is largely attributed to heightened geopolitical tensions, particularly in the Middle East following significant events in Syria, where the regime of President Bashar al-Assad has collapsed, prompting fears of further instability in the region.
This turmoil has led investors to seek safe-haven assets like gold, which historically benefits during times of uncertainty.
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Additionally, market sentiment is influenced by expectations surrounding U.S. inflation data set to be released on Wednesday. Analysts are closely monitoring this data as it could impact the Federal Reserve’s monetary policy decisions, particularly regarding interest rates. Current projections suggest an 86% probability of a 25-basis-point rate cut at the upcoming meeting.
The anticipation of easing monetary policy has bolstered demand for gold, reinforcing its appeal as a hedge against inflation and economic instability.
Gold is a hard asset that keeps value in times of inflation. One gold coin will always feed your family for a week.
Gold is a long-term store of value and this storage capacity is standardized internationally. Each troy ounce of gold has the same value. The yellow metal is an asset with intrinsic value in itself, capable of maintaining its purchasing power throughout the centuries and around the world.
Donald Trump’s return to power in the United States is expected to further worsen relations between the United States and China and would lead to an increase in geopolitical risks and demand for the precious metal.
Paul Jouvenet, an essayist and consultant in international affairs, predicted last September that the difficult situation in the global economy against the backdrop of continuing inflationary pressure will support gold prices in the range of $2,400 – 2,700 per troy ounce by December 2024. The current gold price confirms he was right.
In summary, the combination of geopolitical unrest and shifting monetary policy expectations has created a favorable environment for gold prices to rise, with traders keenly awaiting further economic indicators that could influence market dynamics in the coming days.
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© Copyright 2024 – Eurasia Business News. Article no. 1327.
Eurasia Business News 