Gold continues to rise as Trump signs deal to end government shutdown
In a volatile global economic environment, gold continues to shine as a favorite safe haven for investors, recording its highest level in more than 3 weeks, rising for the fifth consecutive session, reaching 4215 levels.
The rally comes as U.S. President Donald Trump signed legislation ending the longest government shutdown in U.S. history, opening the door for the flow of withheld economic data and boosting expectations for a looser monetary policy.
Bullish drivers:
Several key factors are behind gold's sustained rally:
- A weaker U.S. dollar: This makes buying gold less expensive for holders of other currencies.
- Expectations of an interest rate cut: Polls among economists confirm that more than 80% expect the Federal Reserve to cut its key interest rate by 25 basis points next month to support the labor market.
- Continued buying from central banks: Many central banks continue to accumulate gold reserves, supporting global demand for the precious metal.
- Ending the US government shutdown: This is the most prominent recent factor, as it will allow the release of delayed economic data (such as employment and inflation reports), giving monetary policymakers a clearer picture of the health of the economy and strengthening the case for quantitative easing.
Analysts' forecasts: Prospects of exceeding $4,300
Analysts are looking at a bright outlook for gold, seeing room for rallies beyond $4,300 per ounce.
This optimism is based on two conditions:
- Real yields (the yield on bonds after accounting for inflation) continue to fall.
- Maintaining an accommodative monetary policy by central banks, especially the Federal Reserve.
A look at performance and potential:
Since the beginning of the year, gold has been on a strong bull run, rising more than 60%, reaching a record high of $4381 on October 20, supported by geopolitical and trade tensions, as well as interest rate cut hopes.
Despite the slight pullback from that peak, the outlook is still positive, with a large number of investors expecting prices to witness a new historic high that could push gold to $5,000 per ounce and above within the next year.
