Geopolitical Concerns and Policy Expectations Boost Safe-Haven Appeal
The ongoing conflict, compounded by pledges from Israel and Hezbollah to continue fighting, has heightened market fears. Investors are seeking stability in gold, amid risk aversion and concerns over global market instability. The rising tension has effectively dashed hopes for a swift end to the hostilities.
Zumpfe noted that “anticipation of more relaxed monetary policies is adding fuel to the rally.” Traders are closely watching central banks, as lower interest rates enhance gold’s appeal, given it yields no interest on its own.
Gold’s price surge this year has been remarkable, with gains exceeding 30% in 2024—marking its strongest annual performance since 1979, according to data from LSEG.
Central Banks Poised for Further Rate Cuts
According to market sources, the European Central Bank (ECB) is likely to cut rates again in December, unless economic indicators show a robust improvement.
The CME FedWatch Tool shows traders pricing in a 92% probability of a rate cut by the Federal Reserve in November. Analysts expect such policy adjustments to bolster gold prices further.
Citi Forecasts Gold Reaching $3,000 in 2024
Max Layton, Global Head of Commodities Research at Citi, predicts that gold could reach $3,000 per ounce within six to twelve months.