Gold prices have reached unprecedented highs, buoyed by expectations of a dovish Federal Reserve and growing geopolitical tensions in the Middle East that heighten demand for safe-haven assets.
Market participants anticipate a more moderate 25-basis-point rate cut from the Federal Reserve, replacing earlier expectations for a more aggressive 50-basis-point decrease, which could affect gold negatively in the short term.
The outlook of declining US Treasury bond yields resulting from a dovish Fed stance is expected to weaken the US Dollar, which traditionally benefits gold prices.
Geopolitical uncertainties, particularly the war in Ukraine and tensions involving the US, China, and conflicts in the Middle East, continue to propel investors towards gold as a protective investment.
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