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Gold Prices Hover Near $2,000 Amid Cautious Sentiment

Gold prices have been hovering around $2,000 per ounce, but the precious metal has been unable to break beyond this barrier.

Gold prices have been trading near the $2,000 per ounce mark, but the precious metal’s inability to surpass this level has created cautious sentiment in the market. 

In October, gold closed at $1,999 an ounce after a significant surge, climbing from around $1,800 at the start of the month to a six-month high of $2,009, marking a year-on-year gain of over 21%.

Factors Affecting Gold’s Performance:

Commodity experts suggest that global geopolitical factors have driven gold’s rally. However, as geopolitical tensions wane, gold’s safe-haven appeal is affected. 

While geopolitical events can provide momentum, they may not attract long-term investors. A gold rally based on specific geopolitical events requires constant escalation to maintain its safe-haven status.

Future Outlook for Gold:

Despite the recent consolidation and minor correction, some experts believe that gold could approach record highs if US yields continue to decline. 

Ole Hansen, head of commodity strategy at Saxo Bank, sees the current consolidation around these levels as healthy. To put the new uptrend at risk, gold prices would need to fall back to $1,900 per ounce.

Complex Global Economic Landscape:

The Federal Reserve’s decision to maintain its benchmark interest rate at a 22-year high reflects the perception that global economic risks have become more complex.

Geopolitical conflicts, oil supply concerns, potential credit risks, and the possibility of a US government shutdown contribute to this complex economic landscape.

Record Central Bank Gold Purchases:

Central banks have been actively buying gold, reaching a record high of 800 tonnes between January and September. 

This surge is attributed to inflation in the US and Europe’s wealthier nations and mounting geopolitical uncertainties. 

Notable buyers include the central banks of China, Poland, and Singapore, contributing to a 14% year-on-year growth.

Gold’s Future Trajectory:

Market participants will likely remain cautious about potential rate hikes, although some believe interest rates have peaked. Gold’s upside potential may be limited unless there are further geopolitical escalations. 

Central bank demand is expected to continue, potentially nearing or exceeding the record levels seen in the previous year, as highlighted by the World Gold Council.

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