Gold gained nearly 150 dollars over the week, indicating that signs of the recent correction are gone, and the precious metal has returned to a growth trend. The foundations for strengthening the price in the long term remain stable, with geopolitics coming to the fore.
Following a deeper correction that appeared in the gold market soon after Donald Trump’s victory in the US presidential elections, which caused the price of the royal metal to drop to around 2560 dollars, the past week brought a strong rebound in the rate – on Friday, November 22, an ounce of gold already cost over 2700 dollars.
On Monday, November 25, the gold price weakened slightly (at noon the price was around 2683 USD/oz), but a small correction after such a strong growth, which we have seen in recent days, is a natural phenomenon. However, everything indicates that there is again a future marked by growth for the precious metal.
Geopolitics more important than economics
In the past week, the rise in the price of gold was driven not by economic data, but by geopolitical tensions. The main cause was the intensification of missile attacks and war rhetoric in the conflict in Ukraine. Russia used an intercontinental ballistic missile – this missile has the ability to carry nuclear payloads, and its range is up to 6000 kilometers.
Among others, Radosław Sikorski, head of the Polish Ministry of Foreign Affairs, referred to this attack as a major, Russian escalation of the conflict in this brutal war and highlighted that he had been in contact with the ambassador and had to contemplate with the head of the Ministry of Interior Tomasz Siemoniak, possible evacuations.
International analysts agree that geopolitics is one of the main factors affecting the price of gold and currently appears to be as important – if not more so – than the financial situation in the United States. If the war in Ukraine continues to escalate, the metal will establish new highs and continue to rise.
Investors with a “bullish” attitude towards gold
The rising price of gold also influenced the mood among industry experts and retail traders. In a weekly survey conducted by Kitco, 89% of Wall Street investors and 66% of Main Street showed a “bullish” sentiment, and analysts expect further price increases for both gold and silver.
According to Marc Chandler, Managing Director at Bannockburn Global Forex, closing the week above 2700 dollars per ounce indicates a return of gold to record levels from the end October, close to 2790 USD/oz. Chandler emphasized that a rise to 3000 dollars next year seems likely.
This week, there will be several important economic publications in the USA that may also affect the market – investors will be paying attention to the consumer confidence index for November as well as the sale of new homes for October, and also to the minutes of the last meeting of the Federal Open Market Committee.
Risk aversion and economic signals drive demand
On Wednesday, we will also learn about the PCE core inflation for October, durable goods orders as well as weekly unemployment benefits and data on the sales of existing homes in October. Colin Cieszynski, Chief Market Strategist at SIA Wealth Management, says candidly he is “bullish on gold in the coming week”, and the metal seems to be returning to the growth trend after the correction.
Analysts surveyed by Kitco emphasize that currently there is a solid foundation under the gold market and people holding positions will not withdraw from them. Experts see the potential for price growth to 2730 dollars per ounce in the next two weeks, which are supposed to be “very active” in the royal metal market. And news from around the world favors demand for precious metal.
Quick growth in gold prices is affected, apart from the escalation of war between Russia and Ukraine, by events in the Middle East and changes in the US administration. Investors are also motivated to buy precious metal by worries about weaker growth in many countries, from the USA to Europe, China, and India, in combination with fears of an earlier and deeper recession in industrialized economies.
Michał Tekliński, a gold market expert at Goldsaver.pl, Goldenmark Group.
Source: https://managerplus.pl/i-po-korekcie-cena-zlota-znow-rosnie-a-inwestorzy-sa-byczo-nastawieni-76684
