Gold price today: Four reasons why gold prices will keep rising

Gold rates increased in the domestic futures market Wednesday morning following positive global cues and an uptick in demand in spot markets. In international markets, gold prices gained as the US dollar and treasury yields eased.

Spot gold rose 0.7% to $2,681.50 per ounce by 9:30 a.m. ET (1330 GMT), just a whisker away from record high of $2,685.42 it hit on Sept. 26. U.S. gold futures gained 0.7% to $2,698.20.

Here are five reasons why gold prices will keep rising:

1. Rate cut by the U.S. Federal Reserve

Expectations for a 25-basis-point rate cut by the U.S. Federal Reserve in November are strengthening, while weaker inflation data from Europe and the UK have fueled anticipation of more aggressive easing from their central banks, leading to lower yields and boosting gold price, according to Peter A. Grant, vice president and senior metals strategist at Zaner Metals.

"There’s even an outside chance we could see gold near $3,000, though that’s more likely a target for Q1 2025," Grant noted.

U.S. Treasury yields have dropped to their lowest levels in over a week, enhancing gold’s appeal as it typically performs well in a low interest rate environment. Traders now estimate a 96% probability of a 25-basis-point rate cut in November, according to the CME FedWatch tool.

2. Economic Uncertainty

Ongoing geopolitical tensions and economic instability frequently push investors to seek safe-haven assets, with gold being a primary choice. In times of uncertainty, such as conflicts, financial crises, or fluctuating markets, investors tend to gravitate toward gold to preserve their wealth and minimize risk.

This heightened demand for gold reflects its historical role as a reliable store of value and hedge against inflation. As more investors turn to gold during these turbulent periods, prices tend to rise. Consequently, the combination of geopolitical uncertainty and economic fluctuations creates a favorable environment for gold, reinforcing its status as a sought-after investment.

3. Weakness in the U.S. Dollar

A declining dollar makes gold cheaper for holders of other currencies, increasing its attractiveness and driving up global demand. Since December 2023 in U.S. dollars and October 2023 in euros, the gold price has been consistently reaching new all-time highs.

It's hard to believe that it struggled to surpass the $2,000 mark for nearly four years, only to rise by over 30% to above $2,600 in less than six months. However, when adjusted for inflation, the month-end gold price remains slightly below its record of $2,646 set in January 1980. Consequently, concerns that the market may be nearing its peak are likely unfounded, as gold continues to demonstrate significant strength and resilience.

4. inflation concerns rise

Investors increasingly view gold as a reliable hedge against the erosion of purchasing power. Historically, gold has maintained its value during inflationary periods, making it an attractive option for those seeking to preserve wealth. With the cost of goods and services climbing, individuals and institutions alike turn to gold to protect their investments from inflation's adverse effects.

This growing demand for gold not only reflects its status as a safe-haven asset but also drives prices higher. As more investors seek to mitigate the impact of rising prices, the demand for gold as an inflation hedge continues to strengthen.

Conclusion:

One of the main risks of waiting to purchase gold at a lower price is the chance that the expected dip may never occur, or it might not be as significant as anticipated. Recent trends in the gold market indicate that while prices may experience short-term fluctuations, these declines have not been substantial. This resilience is partly due to gold's historical performance, particularly during periods of economic uncertainty like the current situation. Economic challenges tend to drive gold prices higher rather than lower.

Even recent price dips have been short-lived, with gold quickly bouncing back. In some instances, these drops have been followed by the price reaching new highs. This pattern complicates market predictions, suggesting that waiting for a significant decline could lead to missing the opportunity to buy gold altogether. If prices continue to rise—as many analysts forecast—those holding out for a better entry point risk being left without any gold at all.

When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.