Gold Returns to High Levels Amid Search for Financial Security
The price of gold skyrocketed to its highest level in over two weeks on Thursday, driven by an increase in demand for safe investments, as markets braced for potential changes in interest rates by the Federal Reserve (Fed) and the prospect of trade tariffs proposed by President-elect Donald Trump. Spot gold XAU= rose by 1.3%, reaching $2,657.39 per ounce, its highest figure since December 16. Meanwhile, gold futures in the U.S. GCcv1 increased by 1.1%, hitting $2,671.20.
StoneX analyst Rhona O'Connell noted, "I don't see any specific event that has moved the market today, but geopolitical forces such as international tensions and financial uncertainty ahead of Trump's arrival are supporting the price of gold." Recently, Russia conducted a drone attack in Kiev, affecting several districts, while the Israeli army carried out an attack in a suburb of Gaza. Investors are awaiting employment data next week, as well as the ADP employment report, the minutes from the Federal Open Market Committee's (FOMC) December meeting, and the U.S. employment report, all to evaluate the future of interest rates for 2025. In 2024, rate cuts, central bank purchases, and geopolitical tensions pushed gold to record prices, with an annual increase of over 27%, the highest figure since 2010. Trump's inauguration on January 20 has heightened uncertainty, as anticipated tariffs and the protectionist policies he proposes could lead to inflation and trigger trade wars. In terms of other metals, spot silver XAG= climbed 2.3% to $29.54 an ounce; palladium XPD= fell 0.1% to $909.37; and platinum XPT= advanced 2.1% to $921.55.
As a final note, it’s important to remember that gold and other precious metals often serve as a refuge during times of economic and political uncertainty. Maintaining an appropriate diversification in investments, including assets like gold, can be an effective strategy to protect your portfolio against market volatility.
