Gold prices continued to decline during Tuesday’s trading after witnessing a sharp decline of more than 3% in the previous session. This decline comes amid the calming of geopolitical tensions that had contributed to pushing the prices of the yellow metal to record levels during the past months. Gold recorded high levels, as it was viewed as a safe haven for investors in times of crises and political tensions.
Economic fluctuations and their impact on gold prices
Gold usually witnesses significant price fluctuations due to a group of economic and geopolitical factors. The most prominent of these factors is the global political situation, as gold is directly affected by global events such as wars and trade disputes. For example, when crises escalate or fears of an economic recession appear, demand for gold increases as a hedge against financial fluctuations. But when these tensions subside, gold declines again.
Recently, we have witnessed a relative improvement in global political conditions, which led to a decline in demand for gold. In addition, the rise in interest rates by central banks around the world has had a significant impact on prices, as this has reduced the attractiveness of gold compared to other investment instruments.
Factors affecting gold volatility
The main factors affecting gold volatility are inflation and interest rates. When inflation increases, investors look for assets that preserve value, and gold is one of the most prominent of these assets. On the other hand, when central banks raise interest rates, gold becomes less attractive.
as investors get better returns from interest-bearing assets. These factors make gold prices vulnerable to volatility.
Gold Price Outlook
While we have seen a decline in gold prices recently, forecasts indicate that volatility will not stop there. With the ongoing economic challenges in some global markets.
Market Trends and Analysts’ Expectations on Gold
Gold has continued to fluctuate in price recently, witnessing a significant decline in some periods. However, despite its decline, the yellow metal maintains a relatively good price level. In this context, Matt Simpson, Senior Analyst at City Index, indicated that gold is still in demand as a safe haven, despite the excessive selling that the market witnessed in previous sessions.
Gold as a safe haven in troubled times
Simpson added that we are likely to see more price volatility in the future, especially with the return of focus on the policies of US President Donald Trump. Despite the selling of gold in the market, demand for it remains relatively stable.
as it is one of the most prominent safe havens for investors in unstable times. Historically, gold is considered one of the best assets that investors turn to in times of economic and geopolitical uncertainty, such as trade wars or international conflicts.
The impact of economic policies on gold
On the other hand, President Trump had previously pledged to impose tariffs on some countries such as Canada, Mexico and China. This trend, which could lead to trade wars, adds more uncertainty to global markets.
enhancing gold’s status as a safe investment in the face of these risks. As economic and geopolitical tensions continue, demand for gold may increase and it will continue to maintain its status as a hedge.
Gold in the Shadow of Trade Tensions
Gold is known to rise during times of heightened concerns about the global economy or when political tensions escalate. Trade wars and conflicts between countries lead to a decline in confidence in financial markets.
and thus investors rush to gold as a hedge against these risks. In such circumstances, gold witnesses an increase in demand, which pushes its prices higher.
Statements from the US Federal Reserve and their impact on the markets
In recent statements, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, confirmed that he is open to cutting interest rates again next month. Kashkari is known for his hawkish stance on monetary policy.
but these statements suggest that interest rates could be adjusted to address current economic challenges.
The US Interest Rate Tracker provided by Investing Saudi Arabia indicates that markets currently price in a 25.9% chance of a 25 basis point rate cut by the US Federal Reserve in December. This possibility opens the door to new speculation about the future of the Federal Reserve’s monetary policy, and how such changes could affect financial markets, including gold.
Economic Monitoring and Its Impact on Markets
Meanwhile, traders are watching important data, such as US consumer confidence data and the minutes of the Federal Reserve’s November meeting, due later today. In addition, the first revision of US GDP and the core consumer expenditures (PCE) price index numbers will be released this week. These data are key indicators of the state of the US economy and market performance, allowing investors to make informed decisions about their investment moves.
Gold Forecasts in Light of Fed Statements
Matt Simpson, an analyst at City Index, indicated that he expects gold to trade in a narrow range in the short term, with a slight upward bias. These expectations are in line with potential changes in US monetary policy. Lower interest rates may prompt investors to look for hedging assets such as gold.
which would help push prices higher if the economic situation continues on its current path.
Gold Witnesses Sharp Decline After Strong Gains Last Week
Prices fell sharply during trading on Monday, affected by profit-taking after the yellow metal achieved its largest gains in two years last week.
Gold Prices Drop Sharply at Settlement
At the close of trading, December gold futures fell 3.45%, or $93.7, to $2,618.5 per ounce. This ended a five-session winning streak. This decline reflects the natural price volatility that gold experiences, especially in light of changing geopolitical conditions.
in addition to profit-taking by investors who benefited from price increases in previous weeks.
Changes in spot gold prices and futures
As for the spot gold price, it fell by 0.45% to $2,614 per ounce. While US gold futures fell by 0.14% to $2,638. This decline reflects the usual volatility that gold experiences.
as it is affected by the movement of the US dollar in addition to economic and geopolitical news.
The rise of the US dollar affects precious metals
On the other hand, the US dollar index contracts rose by 0.29% to reach 107.07 points. Gold usually sees a decline in its value when the dollar rises.
as the yellow metal is considered an alternative investment in the event of a decline in the US currency. This decline in gold prices is a result of the opposite effects between the movement of the dollar and the prices of precious metals.
The performance of other precious metals
As for other precious metals, the spot price of silver stabilized at $ 30.31 per ounce. The price of platinum also decreased by 0.1% to reach $ 937.55 per ounce. On the other hand, palladium remained stable at $ 973.36 per ounce, indicating relative stability in some other metals compared to the fluctuations of gold.
