Gold prices hit a record high of $2,749 in early trading hours on Wednesday, while prices of leading cryptocurrencies such as Bitcoin and Ethereum plunged by 1.1 to 0.5 per cent in the last 24 hours, dragging down the global cryptocurrency market cap by 2.2 per cent to $2.42 trillion today.
The surge in gold prices triggered a strong rally in gold ETFs (exchange-traded funds) as well, adding an estimated whopping 157,117 troy ounces of gold in the last trading session, bringing this year’s total net sales to 1.59 million ounces.
“This marks the longest winning streak for gold since July 18, with the recent purchases amounting to approximately $427.3 million at Tuesday’s spot price,” Vijay Valecha, Chief Investment Officer at Dubai-based Century Financial, said.
Gold rally predicted to continue
Market experts expect the current rally in gold gaining further momentum going forward, predicting the price of the yellow metal to reach $3,000-$3,100 level by 2025, with a break-out of a high volatility phase post-US election.
“We expect the current rally in gold prices to continue strongly for a relatively longer period, with prices reaching the $3,000 to $3,100 level by the first half of 2025, considering the rising demand for the precious metal on account of several factors, including the buying-spree by several central banks currently,” Ajay Kedia, a commodity market expert and Managing Director of Mumbai-based Kedia Comtrade and Research, told Arabian Business.
“The technical chart based on the RSI (Relative Strength Index) also supports such a jump in gold prices over the next 7–8-month period,” he said.
Kedia said there is also an undercurrent of policy shift in what is happening with gold currently, as ever since the Russia-Ukraine war broke out, central banks of many countries, including the European Union, China and India, have turned to gold as their reserve asset instead of the traditional US dollar assets.
“The ongoing de-dollarisation move will see a further surge in gold prices,” he said.
Kedia said even the newly expanded BRICS grouping of countries’ push to introduce a new, BRICS-wide currency, is believed to be backed by gold.
“If this materialises, it will lead to a further spike in demand for gold,” he said.
Gold prices hit a record high of $2,749 in early trading hours on Wednesday. Image: Shutterstock
Manoj Jain, Director of Prithvi Finmart, said as far as gold prices are concerned, the overall trend is bullish.
He also pointed out that gold December futures contracts on commodity exchanges have crossed $2,750 per troy ounce, marking fresh life highs.
“Interest rate cuts by global central banks, de-dollarisation, Chinese stimulus measures, and geopolitical tensions will continue to drive gold prices,” Jain told Arabian Business.
“In a very short term – maybe one month’s time – gold prices could approach $2,800 per troy ounce levels.
“In 2025, gold prices are likely to cross $3,000 per troy ounce levels,” he said.
Jain, however, said after the US election, there may be some profit-taking or technical corrections in the prices.
“But not much downside is expected,” he said.
Speculations on Trump presidency
Analysts said the rising odds on a likely Donald Trump presidency on several betting sites is leading to investor speculation that interest rates in the US will likely remain relatively high for a longer-than-anticipated period.
Trump’s policies, including tariffs and restrictions on undocumented immigration, are expected to increase inflation.
“That in turn has supported the US dollar on expectations that interest rates in the US may remain relatively high for a longer-than-anticipated period,” an analyst with a Mumbai-based research firm said.
Republican presidential nominee and former US President Donald Trump. Image: Reuters
Valecha said spot gold soaring to a record high of $2,749 is fuelled by strong demand for safe-haven assets as investors are monitoring the escalating conflict in the Middle East and the upcoming US elections.
“[US] Treasury yields also increased as markets processed contrasting opinions from Federal Reserve officials regarding the future of US interest rates,” he said.
Kansas City Fed President Jeffrey Schmid expressed support for a slower pace of rate reductions, while San Francisco Fed President Mary Daly emphasised the necessity of further cuts to protect the labour market.
“However, despite rising Treasury yields, gold prices are still rising, reflecting the heightened tensions in the Middle East and the growing bets on a Trump presidency,” he said.
Mohamed Hashad, Chief Market Strategist, Noor Capital also said the increasing likelihood of a Trump victory in the US presidential election is contributing to the US dollar’s appreciation, which, in turn, is adding to the spike in demand for gold, triggering further price rises.
“Investors are seeking refuge in gold as a hedge against potential risks,” Hashad said.
Cryptocurrency prices take a hit
Even as gold prices surged, the crypto market took a beating on Wednesday as prices of major cryptocurrencies declined, apparently because of profit-booking by investors following recent highs.
Bitcoin (BTC), Ethereum (ETH), Solana, and other major cryptocurrencies experienced dips, contributing to a 2 per cent drop in the global cryptocurrency market cap, which now stands at approximately $2.34 trillion over the past 24 hours.
Bitcoin was down 2 per cent, trading at $67,131, while Ethereum fell 3.2 per cent to $2,630.
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