Investors drive gold prices to unprecedented levels, anticipating imminent reduction in interest rates - Soaring gold prices reach new peaks - investors are hopeful due to anticipated interest rate decreases
In recent days, the price of gold has been on an unprecedented surge, reaching record highs for the third consecutive trading day. This surge can be attributed to a variety of factors, including increased demand from investors seeking safe havens, geopolitical risks, and aggressive US trade policies.
Gold, predominantly traded in US dollars on the world market, has seen an immense increase in value, with a gain of about 40 percent since the start of the year. A weak US dollar, fueled by increased speculation on falling rates, has made gold cheaper outside the dollar zone, thereby boosting demand.
Investors are increasingly speculating on a large rate cut by the US Federal Reserve of 0.50 percentage points. If this happens, it could further drive up the price of gold. Some analysts, such as Goldman Sachs, predict the gold price could rise to almost $5,000 per ounce.
The gold price has reached a record high in euros at €3,107, although no new record high for the gold price in euros has been mentioned since this milestone. In London, the gold price rose to $3,659.36 per ounce, while in Frankfurt, Germany, the current buying price for unprocessed gold is approximately €98.30 per gram, with a selling price of about €106.27 per gram. The processed gold sale price in Frankfurt is around €111.33 per gram.
The expectation of falling interest rates in the US is the biggest driver of the gold price surge. However, other factors also play a role. Geopolitical risks from Russia's war against Ukraine are contributing factors, as are aggressive US trade policies.
Interestingly, investors might shift a portion of their holdings in government bonds to gold if the independence of the US Federal Reserve is compromised. This could further increase the gold price, as per predictions by some analysts.
Continued gold purchases by states like India and China are also contributing factors to the rising gold prices. As global uncertainty continues to grow, it seems likely that the price of gold will remain high for the foreseeable future.
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