When panic strikes the markets, investors close their risky positions and return, chastened, to the instrument that hasn't failed them for decades: gold. The recent weakening of the US dollar, China's efforts to boost its economy, and geopolitical tensions have propelled gold to unprecedented historical highs. The quarter closed as the best since 2016.

Gold News: Precious Metal Tests $2,685 amid Risk Aversion

Gold prices have skyrocketed to uncharted territory, touching a new all-time high of $2,685 last week. Although the price has slightly retreated to $2,658 per ounce, it remains near record levels.

This surge results from a perfect storm of economic factors, including China's stimulus measures, Middle East geopolitical tensions, and recent monetary policy decisions by major central banks.

“The gold market received an ideal mix for growth,” the Metals Radar analytical team, specialists in gold and silver markets, commented to Finance Magnates. “On one hand, we have the weakest dollar in 14 months. On the other, risk aversion is increasing due to geopolitical tensions in the Middle East.”

China's Politburo commitment to stabilizing the real estate market, coupled with the People's Bank of China's decision to lower the 7-day reverse repo rates by 20 basis points, has significantly boosted gold's upward trajectory. This move, reducing rates from 1.70% to 1.50%, signals China's determination to bolster its economy, historically positive for commodity prices, including gold.

The Federal Reserve's recent 50 basis point rate cut has further fueled bullish sentiment in the gold market. Expectations of an aggressive Fed easing cycle have kept investors optimistic about gold's prospects.

Escalating Middle East tensions, particularly missile strikes between Israel and Hezbollah, have underscored gold's role as a safe-haven asset. These geopolitical uncertainties have prompted investors to seek refuge in gold, contributing to its price surge.

Gold Records Best Streak in over 8 Years

These factors have led gold to close its best three-month period since Q1 2016. In the past quarter, the precious metal's price rose by over 13%, extending its streak of uninterrupted gains to the fourth quarter. Such a streak last occurred at the beginning of the pandemic.

“Forecasts of gold reaching $3,000 or even $5,000 are becoming more common,” Metals Radar adds. “Analysts are less surprised by this. Such dynamic growth is igniting investors' imaginations.”

Goldman Sachs believes in $3,000 gold, presenting their latest projections earlier this month based on a scenario of a weakening US dollar. Meanwhile, Robert Kiyosaki, author of bestselling finance and investing books, sets the bar even higher. He believes gold will reach $5,000 in the coming years.

Gold news, FAQ

Why do people invest in gold?

Investors turn to gold as a safeguard during economic uncertainty. It serves as a hedge against inflation and currency fluctuations, particularly when traditional assets like stocks and bonds falter. Gold's enduring value and historical significance make it an attractive option for diversifying investment portfolios and preserving wealth during turbulent times.

What does the price of gold depend on?

Gold prices are influenced by a complex interplay of factors. These include global economic conditions, geopolitical tensions, monetary policies of major central banks, currency exchange rates (especially the US dollar), inflation expectations, and supply and demand dynamics in the gold market. Additionally, investor sentiment and speculative activities can cause short-term price fluctuations.

What will gold be worth in 2030?

Analysts are discussing potential prices of $3,000 (Goldman Sachs) to $5,000 (Robert Kiyosaki) per ounce in the coming years. However, it's important to note that long-term price predictions are highly speculative and subject to numerous unpredictable factors.

What factors are driving gold prices to surpass $2,685?

Several key factors are propelling gold to record highs:

• Weakening US dollar
• Increased global economic uncertainty
• Geopolitical tensions, particularly in the Middle East
• Monetary policy shifts, including interest rate cuts by major central banks
• Growing investor risk aversion
• Expectations of continued economic stimulus measures

How are China's stimulus and global geopolitics influencing the gold rise?

China's economic stimulus efforts, including lowering key interest rates and stabilizing the real estate market, are boosting gold prices by potentially increasing demand for commodities. Simultaneously, escalating geopolitical tensions, such as conflicts in the Middle East, are driving investors toward gold as a safe-haven asset. These factors combine to create a favorable environment for gold price appreciation, as investors seek stability and protection against economic uncertainties.