Geopolitical Tensions and China's Policy Push Gold Upwards Again
December 10, 2024 (Investorideas.com Newswire) Investorideas.com (www.investorideas.com), a go-to platform for big investing ideas releases market commentary from Quasar Elizundia, Expert Research Strategist at Pepperstone.
"The price of gold continues its momentum this week, marking its second consecutive day of gains (XAUUSD +1%) and settling just below the key $2,700 per ounce level. This performance reflects a macroeconomic and geopolitical environment that brings positive factors for the precious metal.
The recent resurgence in physical demand from China has been a key catalyst in this rally. Additionally, the People's Bank of China increased its gold reserves in November after a six-month pause, while the country announced plans to ease its monetary policy. As we know, from a comparative perspective, such measures often favor safe-haven assets like gold, which do not generate yields.
On the geopolitical front, the collapse of the Syrian regime led by Bashar al-Assad has partially reshaped dynamics in the Middle East. This power vacuum raises concerns about regional stability and intensifies military operations in the area, with Israel taking proactive measures to mitigate security risks. This growing instability has boosted demand for safe-haven assets such as gold.
The week is also marked by key monetary policy decisions in advanced economies. Central banks in Canada, Switzerland, and Europe are expected to lower interest rates, making gold more attractive by reducing the opportunity cost of holding it. In this context, markets are closely watching the U.S. inflation report to be released tomorrow. This data will be crucial in assessing the outlook for rate cuts by the Federal Reserve in 2025, which could significantly influence gold's appeal in the coming months.
The combination of geopolitical uncertainty and global monetary easing decisions is creating a favorable environment for gold, bringing it closer to its historical highs."
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