Gold prices are poised for their biggest weekly dip since 8 December because of de-escalating geopolitical tensions and little prospect of an immediate Fed rate cut. Is this just a temporary correction after a long period of record highs?
Although it has recovered slightly this Friday for the second day in a row to 2,182 euros per ounce, gold looks set for its biggest weekly loss in value since 8 December 2023. This downward correction has been driven by lower demand for safe-haven assets as tensions in the Middle East between Iran and Israel have eased.
Historical precedent has taught us that gold price rises or falls in the face of geopolitical tensions or the outbreak of armed conflict often respond to the perceived risk of stock markets and governments.
On the other hand, investors do not expect the Fed to cut interest rates in June and July this year, which suggests that we are not facing a possible economic slowdown that historically tends to boost demand for the golden metal.
Also, a delay in the US central bank’s interest rate cuts compared to central banks of other G7 economies favours the performance of US assets with low-interest rates, such as Treasury bonds, to the detriment of assets that do not generate fixed returns, such as precious metals.
Bullish forecasts for 2024 remain unchanged
The price of gold has risen by 25% since the outbreak of the latest armed conflict in Palestine and by 15% so far this year. These figures have contributed to the golden metal’s meteoric rise over the last five years, which has appreciated by 80%.
The temporary fluctuations or corrections in the price of gold experienced over the last two weeks after this long period of record highs should not affect forecasts that its value will remain high throughout the year.
The increasing de-dollarisation process of countries seeking to shield their economies from Western sanctions, continued gold buying by central banks in emerging economies, volatile geopolitical tensions in the Middle East and uncertainty over a possible escalation of the war in Ukraine have solidified gold’s popularity as a safe-haven asset. In addition, gold could be boosted by the various presidential elections taking place this year, especially the US elections in November, where another victory for Donald Trump is not ruled out.
Preciosos 11Onze makes it easy to buy gold, at the best price and with total security. Give us a call and speak to one of our agents without any obligation to clarify any doubts you may have and protect yourself from economic crises with the ultimate safe-haven asset: gold. If you want your savings to keep or increase their value, Gold Patrimony.
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Gràcies, per informar
Gràcies a tu, Carles, per ser-hi i per seguir-nos!!!
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Gràcies, Manel!!!