In recent months, international gold prices have experienced a steady increase, reaching a high of 2,365 USD per ounce on April 9. Several factors have contributed to this surge, including political fluctuations, the purchasing power of central banks and expectations of the US Federal Reserve reducing interest rates.
Central banks worldwide have been increasing their gold purchases, which has further boosted gold prices. For instance, China has seen a 17-month streak of increasing its gold holdings. These countries view gold as a safe and profitable asset, especially during times of political turmoil and economic uncertainty.
Geopolitical tensions such as ongoing conflicts in the Middle East have also contributed to the rise in gold prices. With ongoing elections and economic fluctuations globally, experts anticipate that the gold market will continue to see an upward trend. Some analysts even project that gold could reach $3,000 per ounce in the near future, surpassing previous forecasts.
The expectation of the Fed lowering interest rates is a significant driver for the increase in gold prices. As interest rates and gold prices typically move in opposite directions, a potential rate cut by the Fed makes gold more attractive to investors. The market currently predicts a 51% chance of a 25 basis point rate cut in June, which has been supporting gold prices since last year.
Overall, the combination of political instability, central bank buying and expectations of interest rate cuts has led to a rapid increase in gold prices in recent months. This trend is expected to persist as global economic conditions remain uncertain.
