During the past week, the price of gold in US dollars hit an all-time record 7 times, and in Polish złoty was stabilised above 10 thousand zł per ounce. Over the last 12 months – year on year, the gold rate has already increased by over 40 percent, and according to Rosenberg Research agency, this is just the beginning of a rally towards 3,000 USD/oz.
Since September 18, when the US Federal Reserve cut interest rates in the United States, gold has hit a record price per ounce expressed in dollars 7 times over 7 days. Gold also started the new week with the price exceeding 2,600 USD/oz. The price of the royal metal in złoty, which has stabilised at a level above 10,000 złoty per ounce, looks equally impressive.
Is this just the beginning of the gold rally to the next, historic maximums? There is a lot indicating this. Numerous experts are convinced of this, including those from Goldman Sachs and UBS, who predict that by the end of 2025, the price of gold will reach from 2,700 to even 2,900 USD per ounce. Even more boldly, analysts from Rosenberg Research agency estimate that the rate will soon attack the $3,000 barrier!
What drives the price of gold?
At the moment, gold is being driven by two different, separate processes. One of them has just ended, dealing with the fight against inflation and the expectation of lower interest rates in the United States, which occurred in mid-September. Most likely, however, this is just the beginning of cutting rates by the Federal Reserve. According to the FedWatch Tool, a decrease at the November meeting is more or less certain, the next one is expected in December, and more next year.
The effect – first high inflation, and then the expectation of the Fed’s decision – is that the price of gold in US dollars over the last 12 months (year to date) has increased by just over 40 percent. This, in turn, means that most probably the ETFs and others which were not interested in gold so far will return to gold and look for alternatives. Therefore, we have two rallies, one after the other, which may indeed lead to the fact that gold will reach the 3,000 dollars per ounce level.
Another aspect that can drive rising gold’s quotations is the ongoing unrest in the Middle East. The situation in this region of the world is still complicated, tensions are rising, and conflicts between Israel and other countries or organisations are intensifying. There is no chance for stabilisation, and if, for example, Iran would join the conflict, it could lead to escalation, which would not only cause trembling in this part of the world but also in the financial markets, consequently driving up high gold prices.
Michał Tekliński, Gold Market Expert at Goldsaver.pl, Goldenmark Group
Source: https://managerplus.pl/7-rekordow-w-7-dni-zloto-rusza-na-rajd-w-kierunku-3-000-usd-oz-12853
