Gold is on track for its second consecutive weekly loss despite rising for the second day in a row

In a volatile week, gold markets experienced a mixed performance, with daily gains followed by weekly losses. The precious metal is poised for its second consecutive weekly decline, despite rising on Friday to trade around $4,020 an ounce.

This complex landscape raises questions about the future of gold amidst global economic shifts.

What factors are negatively impacting gold?

- Federal Reserve policies:

Federal Reserve Chairman Jerome Powell's comments denying a guarantee of another interest rate cut in December sent shockwaves through the market, pushing the dollar to near a three-month high and making gold more expensive for foreign buyers.

- US-China trade truce:

The one-year agreement on rare earth minerals, which included a reduction in fentanyl tariffs and China's agreement to limit production and resume purchases of US soybeans, eased tensions that had been supporting gold as a safe haven.

However, some uncertainty remains regarding the durability of the agreement.

What factors are supporting gold prices?

Despite the recent downward correction, the long-term positive fundamentals for gold remain intact, with gold maintaining its monthly gains and registering an increase of over 50% since the beginning of the year.

What are the reasons for this?

- Central bank purchases:

Demand from central banks saw a significant jump, with purchases of 220 tons in the third quarter, a 28% increase from the previous quarter. This was led by Kazakhstan and Brazil, which made its first purchase in four years.

- Portfolio diversification:

Investors are increasingly demanding gold across various investment products as a hedging strategy against the volatility of dedollarization.

Future outlook:

The near-term outlook for gold remains contingent on the stability of the trade agreement between the world's two largest economies, China and the United States, and the Federal Reserve's stance on interest rates.

While in the long term, the positive fundamentals remain strong, supported by the growing global trend towards investment diversification and the search for safe havens.

Therefore, its long-term investment appeal remains bright in an era of global economic uncertainty.