Gold trades to all-time high.

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Gold's run is showing no signs of slowing down. The precious metal is trading at $2,440 and set an all-time high of $,2450 overnight. Gold is up over 18% year-to-date. The prospects of lower yields ahead, combined with pressure on the dollar, as well as geopolitical fears are supporting the yellow metal.

Gold performs strongly when the dollar weakens. With the Federal Reserve expected to lower interest rates ahead, this will likely continue to weaken the dollar and reduce the yield on 10-year Treasury bonds. Gold benefits from lower yields as it opportunity cost declines, making it more attractive compared to fixed-income investments.

Moreover, Gold often serves as a safe haven during periods of heightened international tensions. Its tangible nature and limited supply make it more appealing than fiat currencies when uncertainty looms large. With ongoing geopolitical concerns such as the Russia-Ukraine conflict and potential conflicts between Israel and Iran, oil prices may surge, disrupting markets and heightening uncertainty. Tensions between China and Taiwan could also disrupt semiconductor manufacturing, impacting the tech sector. Additionally, the upcoming U.S. presidential election adds another layer of risk to consider.

Another factor is central banks are expected to increase their demand for gold. This uptick in demand is fuelled by central banks in China, India, Turkey, and other emerging markets seeking a hedge against the US dollar and overall market volatility.

Trade the News: View our Economic Calendar

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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