Watching the gold price this week has been a little like watching a child gleefully or a bearded millennial ironically playing with a yo-yo.
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Cut Hopes
The gold price, which has suffered in the last few days as hopes that global economic uncertainty could be lifted in trade talks between President Trump and President Xi, was looking upwards again today.
The spot gold price was up 1.05% taking it back over the magical $4,000 an ounce level to $4,006. U.S. gold futures for December delivery gained 1% to $4,023.3 per ounce.
The factor overshadowing the positive mood music and less than positive dancing from Trump on his Far East trip, was high hopes of another Federal Reserve interest rate cut later today.
Gold is a big fan of lower interest rates as it makes the precious metal look more attractive to investors.
The Fed is expected to cut interest rates by 25 basis points, responding to softer-than-expected September inflation data and signs of labor market weakness.
$5,000 Dreams
Gold has been on quite the tear this year mainly driven by its status as a safe-haven asset. In essence a safe place for investors to put their hard-earned cash during times of economic volatility – largely caused by President Trump’s tariffs strategy- and geopolitical volatility in the form of wars in Ukraine and the Middle East.
It’s not just investors weighing into the metal but central banks buying it up as they cast nervous eyes over the future.
Trump moved to ease off some of that uncertainty today hailing a new trade deal with South Korea and being optimistic about sealing that agreement with China tomorrow.
As such, hopes that gold could soar to $5,000 at some point next year have been somewhat dimmed. However, the demand and allure of gold is still likely to keep it well above that already historically high rate of $4,000.
A potential trade deal between the U.S. and China could diminish gold’s safe-haven appeal and weigh on prices. “The magnitude of the setback diminishes the likelihood of seeing $5,000/oz before the end of the year,” but gold prices could still reach that level by the first quarter of 2026, “ said Peter Grant, vice president & senior metals strategist at Laner Metals.
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