**Gold Prices Reach New Record High Amid Global Uncertainty**
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**All that Glitters is Gold**
Spot gold prices soared to an all-time high of $2,100 per ounce on Monday, reaching a new record for the second consecutive day. This surge comes as the worldwide demand for gold continues to rise, sparking predictions by analysts that gold prices will continue to climb towards even higher levels next year.
According to experts, this ongoing rally in gold prices is driven by several key factors, including geopolitical uncertainty, expectations of a weaker U.S. dollar, and the possibility of interest rate cuts. The Israel-Palestinian conflict and the anticipation of interest rate cuts have further fueled demand for gold, as it is considered a stable investment option during times of economic and political turmoil.
Bullish sentiment surrounding gold prices is reinforced by the analysis offered by Heng Koon How, UOB’s Head of Markets Strategy. How expressed confidence in the potential for gold prices to reach as high as $2,200 by the end of 2024. Additionally, Nicky Shiels, head of metals strategy at precious metals firm MKS PAMP, highlighted the reduced leverage in the gold market compared to previous years, suggesting that prices may surpass the $2,100 mark and set their sights on $2,200 per ounce.
**What’s Behind the Surge?**
A potential policy shift by the Fed in 2024 is seen as a key catalyst for the upward trajectory of gold prices. It is anticipated that lower interest rates could weaken the U.S. dollar, making gold more affordable for international buyers and subsequently boosting demand. This sentiment is echoed by Bart Melek, Head of Commodity Strategies at TD Securities, who forecasts an average gold price of $2,100 per ounce in the second quarter of 2024.
Moreover, a recent survey conducted by the World Gold Council revealed that 24% of all central banks intend to increase their gold reserves over the next 12 months due to growing pessimism about the U.S. dollar as a reserve asset. This trend could lead to a rise in demand from the official sector, contributing to upward pressure on gold prices.
**Federal Reserve’s Role**
Despite recent remarks by Fed Chairman Jerome Powell downplaying expectations for rate cuts, many experts remain optimistic about the future trajectory of gold prices. BMI, a Fitch Solutions research unit, cited potential interest rate cuts by the U.S. Fed, a weaker U.S. dollar, and increased geopolitical tension as the principal factors likely to support gold prices in 2024.
In light of these factors, the surge in gold prices appears to be more than a fleeting trend. Analysts anticipate that gold’s ascent to record-high levels could mark the beginning of a sustained upward trajectory, further solidifying its status as a safe-haven investment in the face of global uncertainty.
