Will international gold prices continue to rise after reaching a new high? How to trade gold?
The 4E platform not only supports trading in commodities such as gold and silver, but also supports various financial assets including cryptocurrencies, foreign exchange, stocks, and indices, helping users seize investment opportunities across different markets in a one-stop manner to preserve and increase their wealth.Recently, gold prices have surged past the 2480 mark, reaching a high of around 2483 USD/ounce, breaking the previous high set in May this year and setting a new historical record, attracting widespread attention from global investors. So, what are the main factors driving the rise in gold prices? Will gold prices continue to rise?
Firstly, the expectation of interest rate cuts by the Federal Reserve is one of the main factors driving up gold prices. Recently, market expectations for a rate cut by the Federal Reserve in September have been heating up, as lower interest rates typically increase the appeal of non-yielding assets like gold. With the slowdown in U.S. inflation data for June, the market is further convinced that the Federal Reserve will adopt a loose monetary policy. According to data from CME Federal Funds futures, the market bets that there is a 91.4% probability that the Federal Reserve will cut rates by 25 basis points in September. The expectation of rate cuts undoubtedly provides strong momentum for the rise in gold prices.
In addition, geopolitical risks and global economic uncertainty are also important factors driving up gold prices. In recent years, the global geopolitical situation has been turbulent, with frequent uncertainties such as trade disputes and regional conflicts, making investors more favor gold as a safe-haven asset. For example, during the Russia-Ukraine conflict, many countries began to question the safety of holding assets denominated in USD and EUR, leading several central banks to choose gold to fill their reserves. Central banks around the world have been buying gold at a pace not seen in decades, pushing gold prices to record highs in the first half of the year.
Recently, the shooting incident involving Trump has further stirred market sentiment. This unexpected event has increased market tension and raised the probability of Trump returning to the White House. If re-elected, the uncertainty of his policies could have a greater impact on the international order, further increasing global economic uncertainty. These geopolitical risks and economic instability factors work together to drive up gold prices.
Gold's status as a traditional safe-haven asset is becoming increasingly prominent. Recently, Ray Dalio, the founder of the internationally renowned investment firm Bridgewater Associates, also voiced support for gold, emphasizing its importance as an effective risk diversification tool. Dalio pointed out that when facing internal and external conflicts and economic uncertainty, the allocation of gold in the optimal investment portfolio should exceed 10% of the asset mix to better withstand risks. This view undoubtedly injects more confidence into the gold market.
However, it is worth noting that the International Monetary Fund (IMF) has issued a warning regarding the optimistic expectations for rate cuts, stating that inflation in the service sector remains stubborn and could become an obstacle on the path to reducing inflation. Its chief economist indicated that the decline in inflation in the U.S. during the first half of the year has experienced some setbacks, and while a rate cut may occur in the second half of this year, it might only be one cut, with another potentially next year. The IMF's warning reminds the market to treat rate cut expectations with caution, which could bring some uncertainty to the rise in gold prices.
Despite this, the market generally holds a positive view on gold. The well-known precious metals consulting firm Metals Focus predicts that gold prices will reach a historical high this year. Citibank also stated earlier this month that it expects gold prices to reach between 2700 and 3000 USD per ounce next year. These predictions reflect the market's confidence in gold's future performance, further enhancing investor interest in gold.
As a safe-haven asset, despite the current high prices, its appeal remains significant against the backdrop of considerable global economic instability. For investors looking to participate in gold investment, 4E offers a convenient and flexible option.
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In addition, the 4E platform supports not only gold and other commodities trading but also various financial assets such as cryptocurrencies, forex, stocks, and indices, helping users seize investment opportunities across different markets for wealth preservation and appreciation.
