Gold on A Run Toward $3,000 As Global Tensions Remain High
Gold is back up and running after the dip last week. Yesterday we saw another record high, which points to $3,000 soon as buyers keep coming
Gold is back up and running after the dip last week. Yesterday we saw yet another new record high, which points to $3,000 soon as buyers keep piling in. The bullish momentum in 2024 has been relentless, with the Gold price increasing around 30% so far, while the demand for physical Gold keeps increasing.
After FOMC member Logan’s balanced comments, suggesting a cautious approach to rate decreases, gold reversed its gains and fell by $25 on Monday. This came after it had reached a record high of $2,740. Despite GOLD dipping below the 20 SMA for the first time since last Thursday, the 50 SMA (yellow) on the H1 chart held as support. Amid tensions in the Middle East and uncertainty surrounding the upcoming U.S. presidential election, investors bought into gold at the 50 SMA level, prompting a recovery.
Safe-Haven Demand and Speculation
Gold’s rise was further driven by speculative buying, as investors positioned themselves ahead of the U.S. election, seeking safety from market volatility. On Tuesday, gold saw a 1.2% increase, pushing the spot price to $2,748. There are other potential drivers for this surge, including discussions about the creation of a BRICS currency, partially backed by gold, which could increase central bank demand from countries like China, India, and Russia.
Gold Chart H1 – MAs Supporting the Bullish Momentum
BRICS Meeting and De-Dollarization
The BRICS summit, held in Russia, has also contributed to the gold price rally. With de-dollarization on the agenda, a potential gold-backed currency for the BRICS nations is being discussed, further boosting demand for gold.
Geopolitical Tensions and Gold’s Risk Premium
Geopolitical developments, particularly the escalating Middle East conflict, have added to gold’s appeal as a safe haven. Reports suggest that the Israeli Defense Forces (IDF) are preparing to attack Iran, raising uncertainty and increasing the risk premium on gold prices.
Federal Reserve Outlook and Impact on Gold
Although the Federal Reserve’s interest rate outlook has shifted toward a more gradual decline, rather than a steep double-dose 50 basis point cut, gold remains resilient. Despite the U.S. dollar’s recent bullish momentum in October, which typically makes non-interest-paying assets like gold less attractive, the metal continues to rise steadily amidst global uncertainties.
Gold Live Chart
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