Why Gold Prices are Notching New Records Last w
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Posted On: 10/24/2024 5:39:53 PM
Why Gold Prices are Notching New Records
Last week saw the price of gold hit a new high as uncertainty about the upcoming presidential elections in the U.S. and conflict in the Middle East prompted investors to seek out safe haven assets. Experts believe that an image of global instability often prompts investors to buy more gold in a bid to safeguard their finances.
A senior market analyst at Kitco Metals, Jim Wyckoff, explains that the lack of consensus among the public or the market on which candidate will win the election is causing uncertainty, which often triggers demand for gold as a safe haven asset.
This isn’t the first time the metal’s price has increased either. Since the beginning of the year, the precious metal has seen its price rise by more than 30%, partly driven by expectations that the Fed will lower interest rates.
Increasing demand from investors focused on hedging against unrest and diversifying their portfolios as well as growing purchases of gold reserves among central banks has also contributed to the price increase.
Data from the World Gold Council shows that central banks around the world bought over 1,000 tons of gold in the last two years. Prior to this, that threshold had never been exceeded. China ranks first on the list of countries that have significantly increased their gold reserves. Until May, the People’s Bank of China had bought gold for 18 months straight. The East Asian country is working to decrease its dependence on the United States dollar.
Prof. Campbell Harvey of Duke’s Fuqua School of Business stated in a recent interview that United States-China relations had been strained for a while now, adding that in the last year, the relations had gotten worse. This, he explained, made it reasonable for them to decrease their reliance on the dollar and seek credible alternatives like gold.
Data from the World Bank also shows that gold purchases by central banks declined in the middle of this year, with China’s central bank halting its gold purchases over the last 5 months.
Despite this, the price of the precious metal has continued to rise in recent months due to growing investor expectations that the Federal Reserve would reduce interest rates. In September, the Federal Reserve reduced interest rates for the first time in over four years.
The CME FedWatch Tool notes that the chances of an additional quarter-point decrease in rates in November stand at over 90%. Global X analyst Trevor Yates explains that lower rates of interest normally coincide with higher prices of gold.
It would be interesting to know how companies like GEMXX Corp. (OTC: GEMZ) which not only mine gold but also manufacture finished goods like jewelry from the gold could be impacted by the prices of gold reaching new highs every so often.
NOTE TO INVESTORS: The latest news and updates relating to GEMXX Corp. (OTC: GEMZ) are available in the company’s newsroom at https://ibn.fm/GEMZ
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
Last week saw the price of gold hit a new high as uncertainty about the upcoming presidential elections in the U.S. and conflict in the Middle East prompted investors to seek out safe haven assets. Experts believe that an image of global instability often prompts investors to buy more gold in a bid to safeguard their finances.
A senior market analyst at Kitco Metals, Jim Wyckoff, explains that the lack of consensus among the public or the market on which candidate will win the election is causing uncertainty, which often triggers demand for gold as a safe haven asset.
This isn’t the first time the metal’s price has increased either. Since the beginning of the year, the precious metal has seen its price rise by more than 30%, partly driven by expectations that the Fed will lower interest rates.
Increasing demand from investors focused on hedging against unrest and diversifying their portfolios as well as growing purchases of gold reserves among central banks has also contributed to the price increase.
Data from the World Gold Council shows that central banks around the world bought over 1,000 tons of gold in the last two years. Prior to this, that threshold had never been exceeded. China ranks first on the list of countries that have significantly increased their gold reserves. Until May, the People’s Bank of China had bought gold for 18 months straight. The East Asian country is working to decrease its dependence on the United States dollar.
Prof. Campbell Harvey of Duke’s Fuqua School of Business stated in a recent interview that United States-China relations had been strained for a while now, adding that in the last year, the relations had gotten worse. This, he explained, made it reasonable for them to decrease their reliance on the dollar and seek credible alternatives like gold.
Data from the World Bank also shows that gold purchases by central banks declined in the middle of this year, with China’s central bank halting its gold purchases over the last 5 months.
Despite this, the price of the precious metal has continued to rise in recent months due to growing investor expectations that the Federal Reserve would reduce interest rates. In September, the Federal Reserve reduced interest rates for the first time in over four years.
The CME FedWatch Tool notes that the chances of an additional quarter-point decrease in rates in November stand at over 90%. Global X analyst Trevor Yates explains that lower rates of interest normally coincide with higher prices of gold.
It would be interesting to know how companies like GEMXX Corp. (OTC: GEMZ) which not only mine gold but also manufacture finished goods like jewelry from the gold could be impacted by the prices of gold reaching new highs every so often.
NOTE TO INVESTORS: The latest news and updates relating to GEMXX Corp. (OTC: GEMZ) are available in the company’s newsroom at https://ibn.fm/GEMZ
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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