"Gold surged to $4420 / Oz for the first time, extending a rally after a period of corrective and sideway moves. The move unfolded as geopolitical risk resurfaced and positioning shifted decisively toward safety, even as traditional headwinds from bond market failed to bite. Renewed geopolitical tension played a clear role. From Latin America, where a major military US intervention might take place soon, to the Middle East, with rising rhetoric around a possible Israel Iran escalation placing Iran's ballistic missile program back in focus."
"At the same time, monetary expectations are doing heavy lifting. Gold is trading higher as markets increasingly price additional Federal Reserve easing early next year, following softer inflation and labour signals. The looser policy expectations reduce the opportunity cost of holding non yielding assets, a dynamic that has lifted not only gold but also silver and parts of the broader commodity complex."
"What stands out most is what gold is ignoring. US 10-year Treasury yields are hovering near their highest levels since September, while bond market volatility as measured by the MOVE index has pushed deeper toward lows last seen in 2021. Under normal conditions, that mix would pressure bullion, yet gold continues to climb, signalling that this rally is not being driven by bond market mechanics."
Gold rallied to record levels, driven by resurfacing geopolitical risk and a decisive shift into safety. Rising tensions from potential US military action in Latin America and heightened Israel–Iran rhetoric increased demand for hard hedges. Markets increasingly price additional Federal Reserve easing early next year after softer inflation and labour signals, reducing the opportunity cost of holding non‑yielding assets and lifting precious metals and parts of the commodity complex. The rally is occurring even as US 10‑year yields remain elevated and bond volatility sits near multi‑year lows, while equities trade cautiously and ETF inflows continue.
Read at London Business News | Londonlovesbusiness.com
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