World gold prices rose beyond a historic high of $2,700/ounce in the final trading session of the week on October 18, boosted by escalating tensions in the Middle East, uncertainty surrounding the US presidential election and expectations of monetary policy easing.
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| World gold prices surpass all historical peaks, increasing 2.4% in 1 week; USD increases for 5 consecutive days. (Source: Finance Yahoo) |
World gold price surpasses all historical peaks
At the end of this trading session, the spot gold price increased by 1% to 2,720.05 USD/ounce and recorded a 2.4% increase this week. Meanwhile, the US gold futures price increased by 0.8% to 2,730 USD/ounce.
“With the conflict in the Middle East intensifying – especially after Hezbollah’s announcement of a wider conflict with Israel – investors have flocked to gold, a traditional safe haven asset in times of political and economic uncertainty,” said Alexander Zumpfe, precious metals trader at Heraeus Metals in Germany.
Additionally, concerns surrounding the US presidential election and expectations of loose monetary policies also fueled the gold price rally.
Concerns about the situation in the Middle East and the upcoming US election are creating an environment of uncertainty, which is beneficial for assets considered safe havens such as gold, said Nitesh Shah, commodity strategist at WisdomTree.
Gold prices have hit record highs this year, as expectations of more central bank rate cuts and geopolitical uncertainty have driven prices up more than 30% since the start of the year, their best annual performance since 1979.
Lower interest rates increase the appeal of gold, which is a non-yielding asset.
Many sources say that the European Central Bank (ECB) is likely to lower interest rates again next December.
According to the CME Fedwatch tool, the percentage of investors also predicting the probability of the US Federal Reserve (Fed) cutting interest rates in November 2024 is 92%.
Mr. Max Layton, Head of Global Commodity Research at Citi Bank, predicts that gold prices will reach $3,000/ounce within the next 6-12 months.
The US dollar starts to fall?
The US dollar fell on October 18 after five consecutive days of gains. The reason was that the risk-off sentiment increased when the Chinese government officially launched a new economic stimulus package, boosting stock markets. This also helped to increase the value of the yuan (CNY) and boost popular currencies in commodity trading such as the AUD and CAD.
However, the dollar index, which measures the value of the U.S. currency against a basket of six major global currencies, is on track for a third week of gains, now up 0.6% on the week. So far this month, the dollar index has gained about 2.7%, its biggest monthly gain since February 2023.
The US dollar surpassed the 150 yen mark for the first time since early August 2024 in trading on October 17, after new data showed stronger-than-expected US retail sales and the European Central Bank (ECB) cut interest rates.
Traders have recently bought the dollar on the possibility that the interest rate differential between the US and Japan will remain wide following solid US economic data.
Erik Bregar, director of FX and precious metals risk management at Silver Gold Bull in Toronto, said Friday’s dollar weakness could be temporary. He predicted the biggest support for the greenback in the past few weeks has been a shift in expectations for Federal Reserve policy from tightening to more dovish following a series of generally positive U.S. economic data.
According to estimates from the London Stock Exchange (LSEG), there is a 95% chance that the Fed will cut interest rates by 0.25 percentage points at its November 2024 meeting and a 5% chance that the agency will pause or keep interest rates within the target range of 4.75-5%.
In Asia, the yuan on the international market increased against the dollar. In the trading session on October 19, 1 USD was exchanged for 7.1177 yuan, down 0.3% from the previous session.
The Australian dollar rose 0.1% to $0.6704.
The British pound (GBP) was also one of the currencies that moved the most against the USD in the last session of the week. The pound rose 0.2% to 1 GBP to 1.3042 USD, after UK data showed retail sales increased more than expected in September 2024. This gave investors optimism about the strength of the UK economy.
Source: https://baoquocte.vn/gia-vang-the-gioi-tang-hon-30-som-dat-3000-usdounce-dong-usd-tang-manh-lien-tiep-dieu-gi-dang-xay-ra-290629.html
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