Regional tensions are fueling a meteoric rise in gold prices

The World Gold Council estimated that geopolitical tensions contributed to the increase in the prices of the yellow metal by about 2% in the last three months, and 7% since the beginning of the year, according to Juan Carlos Artigas, head examination at the Council. , who suggested that worsening conditions in the region would contribute to another rise in the price of gold.

Artigas explained in an interview with Al-Sharq that it is among the three main price drivers goldthat is the demand for bullion from central banks, reduced Interest rates The decline in the value of the dollar, geopolitical tensions, interest rate cuts and demand from central banks had the biggest impact, as these two factors contributed to the increase in gold prices by around 6% in the last three months. gone, and the decline of the dollar. he himself gave 2%.

Gold prices rose by about 15.5% in the past three months, as the price of an ounce jumped from $2,323 an ounce in early July to about $2,684 an ounce in early October, which is very close to its all-time high. an all-time high when the price of an ounce rose slightly above $2,685 at the end of trading on September 26.

Future gold price movement

Artigas expects gold prices to rise further in the future, supported by interest cuts in America and Europe and geopolitical tensions.

The price of gold has increased by about 30% since the beginning of the year, and experts expect it to continue on the way up. months, due to the high level of investors buying the precious metal, amid expectations that the Council will reduce… The Federal Reserve raises interest rates again.

Goldman Sachs notes that the precious metal is characterized by an “unbelievable bull market,” and raised the forecast for the price of an ounce by the end of the year to $2,700. While JP Morgan expected the price of an ounce to reach 2,500 this year, a level that went higher than last month.

US elections and gold

“The impact of the elections on him US Gold itself is limited, because historically, elections have not moved the price of the yellow metal much,” according to Artigas, who believed that “it is not the elections that are important, but the policies that are put in place subsequent action, such as taxes and interest rates, which take time to crystallize.”

A Bloomberg poll a few weeks ago found that gold would be the best hedge in investment portfolios should Donald Trump return to the White House. In the survey there were 480 participants, and 53% of them believed that gold promises the best performance as a safe haven if Trump wins the presidential race, while 26% chose the dollar, and 21% chose % Swiss franc.

Gold rose more than 50% in Trump’s last presidency, while the Bloomberg Dollar Index fell more than 10%, thanks to his election program, which is based on taxes and tariffs that reduce and reduce regulations and legislation.

More than 60% of participants in a Bloomberg poll expected that the value of the US currency would decrease if the candidate of the Republican Party won a new presidential term.

In his interview with Al-Sharq, Artigas considered that “the uncertainty about whether Harris or Trump would win the presidential race is pushing towards hedging and buying gold now .”

Chinese application

According to Artigas, Chinese demand is divided into two aspects: jewelry demand and investment demand. He said that “jewelry demand had been dampened by rising prices and slower growth” in the world’s second-largest economy, but this was “compensated by interest in gold as an investment asset, whether by cash or through purchases in the over-the-counter market.”

He saw demand China Gold saw a sharp decline amid high prices for the precious metal, as sales in jewelery stores in the country declined as buyers hesitated to buy.

The total demand for bullion decreased by 6% in the first half of this year compared to the previous year, reaching 524 tons, according to a report issued by the China Gold Council. The data shows a sharp decline of 52% in jewelry purchases in the second quarter, according to Bloomberg calculations.

This represents a sharp shift from the first three months of the year, when the country’s central bank and consumer purchases of the precious metal, as a hedge against a prolonged downturn in real estate and volatile stocks, helped to ‘ pushed gold prices to record highs. . The People’s Bank of China stopped buying in May and June after an 18-month buying period.