Gold prices climbed above $2,100 on Monday before retracing in price a few hours later. The precious metal has risen in price for two consecutive months making investors reap handsome rewards. The yellow metal gained 19% in 60 days and outperformed the stocks, forex currencies, oil, cryptocurrency markets, and other commodities. The prices of gold are now hovering around the $2,070 mark but analysts predict more upside swings.
Gold Prices Will Not Stop at $2,100: Here’s Why
The anticipated drawback in interest rate hikes remains to be the key driver for gold prices to shoot up. Lower interest rates weaken the US dollar and a softer USD makes gold cheaper for financial establishments. Institutional investors are exiting from the currency markets and investing billions in gold as a shield against the financial turmoil.
Additionally, Central Banks of countries such as China, India, and Russia have accumulated billions worth of gold in 2023. These three countries are the top buyers of gold this year and are driving demand for the yellow metal.
Moreover, the Central Banks of many other countries plan to increase their gold reserves next year in 2024. The development could push the precious metal’s price further and not stop at the $2,100 level.
The prices of the precious metal are in demand as a safe haven due to the Israel and Palestine conflict. Gold mostly performs well when the global markets are in a crisis or when wars and conflicts are escalated. The conflict between Israel and Palestine is escalating with new developments and humanitarian crises. The move adds more strain on the markets making the prices head south.
In conclusion, the main factor that drives gold above $2,100 is interest rate cuts by the Feds in 2024. The conflict in the Middle East also boosts gold’s prospects as a safe haven for institutional investors.
