Unconventional Market Factors Cause Gold Market to
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Posted On: 04/19/2024 5:08:18 PM
Unconventional Market Factors Cause Gold Market to Rise
A Goldman Sachs report has found that unconventional market factors are increasingly affecting gold prices and causing them to respond differently from traditional trends. The recent report pointed out that nontraditional factors caused gold prices to rise by more than 11% in India, indicating a pattern where emerging rather than conventional factors are influencing the precious metal’s prices.
Although this trend has been mostly confined to India, it shows that gold is still susceptible to factors other than known determinants. Gold prices in India have increased by more than 11% in recent weeks, a surge that was particularly notable despite the gold market’s robust equity markets and strong growth trends.
Experts posit that rather than traditional fiscal factors contributing to increases in gold prices in India and other major markets, the price hike may be due to central banks in developing countries accumulating gold at record levels coupled with increased retail demand in Asian countries. Furthermore, even though expectations of an interest rate cut by the U.S. Federal Reserve have dropped, gold prices have risen by 17% across the board over the past two months.
Gold prices typically move based on currency valuations, growth prospects and real interest rates, but the Goldman Sachs research revealed that current prices seem to be deviating from these known factors. According to Goldman Sachs, this anomaly is most likely caused by “fresh macroeconomic and geopolitical elements” that have put upward pressure on gold prices. Uncertainties around U.S. fiscal policies and the upcoming presidential election, as well as market anticipation for potential interest rate cuts by the Federal Reserve have also pushed gold prices upward, the Goldman Sachs report says.
For the past several months, gold prices have also been supported by a myriad of geopolitical factors that increased the precious metal’s investor appeal. The ongoing conflict in Gaza increased fears of a war in the broader oil-producing region affecting oil prices and led to a surge in gold purchases as investors sought to preserve the value of their investments.
A record level of gold purchases by central banks, particularly in China and India, also contributed to increased gold prices globally. But while the surging gold prices in India are beneficial for investors who have invested in the precious metal, high gold prices may be a concern in a place such as India where gold has a significant cultural and economic role. As a result, high gold prices in India could potentially impact the country’s national stability and trade balance.
The “unconventional market forces” driving the current surge in gold prices are likely to act as tailwinds to exploration companies such as Eloro Resources Ltd. (TSX: ELO) (OTCQX: ELRRF) as the rising gold prices could spur investor interest in gold industry stocks.
NOTE TO INVESTORS: The latest news and updates relating to Eloro Resources Ltd. (TSX: ELO) (OTCQX: ELRRF) are available in the company’s newsroom at http://ibn.fm/ELRRF
Please see full terms of use and disclaimers on the MiningNewsWire website applicable to all content provided by MNW, wherever published or re-published: https://www.MiningNewsWire.com/Disclaimer
A Goldman Sachs report has found that unconventional market factors are increasingly affecting gold prices and causing them to respond differently from traditional trends. The recent report pointed out that nontraditional factors caused gold prices to rise by more than 11% in India, indicating a pattern where emerging rather than conventional factors are influencing the precious metal’s prices.
Although this trend has been mostly confined to India, it shows that gold is still susceptible to factors other than known determinants. Gold prices in India have increased by more than 11% in recent weeks, a surge that was particularly notable despite the gold market’s robust equity markets and strong growth trends.
Experts posit that rather than traditional fiscal factors contributing to increases in gold prices in India and other major markets, the price hike may be due to central banks in developing countries accumulating gold at record levels coupled with increased retail demand in Asian countries. Furthermore, even though expectations of an interest rate cut by the U.S. Federal Reserve have dropped, gold prices have risen by 17% across the board over the past two months.
Gold prices typically move based on currency valuations, growth prospects and real interest rates, but the Goldman Sachs research revealed that current prices seem to be deviating from these known factors. According to Goldman Sachs, this anomaly is most likely caused by “fresh macroeconomic and geopolitical elements” that have put upward pressure on gold prices. Uncertainties around U.S. fiscal policies and the upcoming presidential election, as well as market anticipation for potential interest rate cuts by the Federal Reserve have also pushed gold prices upward, the Goldman Sachs report says.
For the past several months, gold prices have also been supported by a myriad of geopolitical factors that increased the precious metal’s investor appeal. The ongoing conflict in Gaza increased fears of a war in the broader oil-producing region affecting oil prices and led to a surge in gold purchases as investors sought to preserve the value of their investments.
A record level of gold purchases by central banks, particularly in China and India, also contributed to increased gold prices globally. But while the surging gold prices in India are beneficial for investors who have invested in the precious metal, high gold prices may be a concern in a place such as India where gold has a significant cultural and economic role. As a result, high gold prices in India could potentially impact the country’s national stability and trade balance.
The “unconventional market forces” driving the current surge in gold prices are likely to act as tailwinds to exploration companies such as Eloro Resources Ltd. (TSX: ELO) (OTCQX: ELRRF) as the rising gold prices could spur investor interest in gold industry stocks.
NOTE TO INVESTORS: The latest news and updates relating to Eloro Resources Ltd. (TSX: ELO) (OTCQX: ELRRF) are available in the company’s newsroom at http://ibn.fm/ELRRF
Please see full terms of use and disclaimers on the MiningNewsWire website applicable to all content provided by MNW, wherever published or re-published: https://www.MiningNewsWire.com/Disclaimer
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