Gold Prices Near 30% Rise YTD as US Election Concerns and Market Volatility Boost Safe Haven Appeal

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As a seasoned analyst with over two decades of experience in the financial markets, I have witnessed numerous ups and downs, bubbles, and crashes, but the current market dynamics surrounding gold are particularly intriguing. The ongoing uncertainty leading up to the US presidential election, coupled with geopolitical risks and a weakening broader commodity market, has resulted in historically high demand for gold.

This week, gold prices climbed close to record levels due to investor anticipation of a potentially disputed U.S. presidential election. With polls indicating a close contest and doubts about the final result, there’s been an increase in interest for gold as it’s seen as a secure investment option.

In recent months, central banks, known for being significant buyers of gold, have boosted their purchases even more. This increase has played a role in gold’s strong performance this year. So far in 2021, the price of gold has risen by almost 30%, reflecting investors’ growing interest in safeguarding their portfolios amidst anticipated market fluctuations.

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As a researcher, I am sharing insights from UBS Group, where their Global Wealth Management Chief Investment Officer, Mark Haefele, and his team, anticipate heightened uncertainty and market volatility approaching the upcoming election. In this context, they propose gold and oil as potent portfolio hedges to mitigate potential risks.

In the short run, Trump’s trade policies might bolster the U.S. dollar, but if a trade war continues for an extended period, it could negatively impact worldwide risk perception, which would ultimately strengthen the dollar as well.

In spite of the possible challenges posed by a strengthening U.S. dollar and increased interest rates, gold has persisted in its climb higher due to investor confidence that the Federal Reserve’s eventual shift towards easier monetary policies and a decelerating U.S. economy will amplify gold’s value even more.

Based on a recent industry poll, it’s anticipated that gold prices could hit unprecedented peaks within the next year. Experts at the London Bullion Market Association gathering in Miami predict the price per ounce to rise to approximately $2,917.40 by late October 2025.

As a researcher, I’m observing an unusually high demand for gold, which is projected to make this year one of its strongest returns since 1979. At present, the price of gold hovers around $2,670 per ounce.

Significantly, Societe Generale has moved all its commodity investments into gold, primarily due to heightened geopolitical concerns and a sluggish overall commodity market trend.

The French bank raised its gold reserves to comprise 7% of its overall investment strategy, marking a substantial 40% growth compared to the previous quarter. This shift towards gold indicates a rising faith in gold as a secure investment option during periods of market turmoil and unpredictability worldwide.

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2024-10-17 03:53