Gold price have increase this week just as they ended the last, reaching new record highs. The current price is now $2,740 per troy ounce, marking a significant increase. Commerzbank’s commodity analyst, Carsten Fritsch, notes that gold prices have risen by 2.4% over the past week, continuing a trend of steady increases for five of the last six weeks.
Gold Rises More than 30% Since January
Since the beginning of the year, the gold price has increase by over 30%, which could lead to the strongest annual growth in 45 years. This notable rise occurred even though the US dollar has gained more than 3% since the end of September. Interest rate cut expectations by the Federal Reserve have also been greatly reduced. Usually, gold prices respond to US dollar fluctuations and interest rate predictions, but this time, other factors are in play.
Key Drivers Behind Gold’s Surge
The recent increase in gold prices can’t solely be explained by traditional factors like the US dollar and interest rates. Instead, the ongoing conflict in the Middle East, particularly between Israel and Iran, has heightened geopolitical tensions. Additionally, uncertainty surrounding the upcoming US elections has fueled market anxiety, pushing investors toward gold. A positive market sentiment toward gold is also a contributing factor.
Speculative Activity and Market Sentiment
On Friday, the CFTC reported that speculative net long positions had increased for the week ending October 15. This followed a previous reduction when gold prices dipped. According to Bloomberg, Gold ETFs saw inflows for five consecutive trading days last week, totaling almost 13 tons. Another 5 tons were added just yesterday, further boosting the market. Despite this, analysts believe the price surge may be exaggerated, and a correction might be expected. The relative strength index (RSI) shows the market is now in overbought territory.
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