Geopolitical concerns and policy expectations increase the appeal of safe havens
The ongoing conflict, exacerbated by promises from Israel and Hezbollah to continue fighting, has increased fear in the market. Investors are looking for stability in gold amid risk aversion and concerns about the instability of global markets. The mounting tension has effectively dashed hopes for a quick end to hostilities.
Zumpfe noted that “anticipation of looser monetary policy adds fuel to the rally.” Traders are keeping a close eye on central banks as lower interest rates increase gold’s appeal as gold itself does not earn interest.
Gold’s price rise this year has been notable, with gains of more than 30% through 2024, marking the strongest annual performance since 1979, according to LSEG data.
Central banks ready for further interest rate cuts
According to market sources, the European Central Bank (ECB) is likely to cut rates again in December unless economic indicators show robust improvement.
The CME FedWatch Tool shows that traders estimate a 92% probability of a Federal Reserve rate cut in November. Analysts expect such policy adjustments to further boost gold prices.
Citi predicts that gold will reach $3,000 by 2024
Max Layton, Global Head of Commodities Research at Citi, predicts that gold could reach $3,000 per ounce within six to 12 months.