Article Summary

  • Gold prices surge fueled by expectations of rate cuts and economic anxieties.
  • Impact of the US government shutdown and delayed economic data releases.
  • Predictions of gold reaching $4500/ounce soon, potentially $5000 in the future.

Gold Rises Amidst Uncertainty

On Monday, gold prices experienced a notable increase, exceeding 2% at one point, driven by anticipation of the Federal Reserve lowering interest rates in the near future. In addition, persistent uncertainty and concerns about economic and political risks contributed to increased demand for gold as a safe haven. Spot gold prices rose to surpass $4330, while New York gold futures touched $4350 per ounce, marking a daily increase exceeding 3%.

Price Volatility and the Impact of Political Statements

Gold prices experienced sharp fluctuations at the end of last week, reaching a record high of $4370 per ounce before rapidly declining to close down 1.8%, the largest daily drop since mid-May. This decline is attributed to statements by the US President that eased some market concerns.

Expectations of Further Increase

Jeffrey Christian, Managing Partner at CPM Group, pointed out that concerns about the political and economic situation in the United States are driving gold prices higher, especially after the heavy selling seen in the market last Friday. He added, "We expect gold prices to continue rising in the coming weeks and months, and we wouldn't be surprised if they reach $4500 per ounce soon."

Impact of Government Shutdown and Delayed Economic Data

The US government shutdown entered its 20th day on Monday, after senators failed for the tenth time to break the political deadlock. The government shutdown has delayed the release of important economic data, leaving investors and Federal Reserve policymakers in a state of uncertainty before the monetary policy meeting scheduled for next week. The delayed Consumer Price Index (CPI) data is scheduled to be released on Friday.

Expectations of Interest Rate Cuts

Traders are predicting with up to 99% probability that the Federal Reserve will cut interest rates at its meeting next week, and they also expect another cut in December. Gold typically performs well in a low interest rate environment, as it is considered a non-interest-bearing asset.

Optimistic Outlook

Christian concludes by saying, "I wouldn't be surprised if gold prices reach $5000 per ounce sometime next year. It will depend on the continued exacerbation of political problems, which we are already witnessing."

Risk Warning and Disclaimer: This article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform. Trading Contracts for Difference (CFDs) involves high leverage and significant risks. Before making any trading decisions, we recommend consulting a professional financial advisor to assess your financial situation and risk tolerance. Any trading decisions based on this article are at your own risk.

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