Key Takeaways

  • Spot gold sets a fresh new record to kick off the week
  • A weaker US dollar acts as a key driver behind gold’s growth

Gold’s Ascent

Gold sped past a new all-time high, skimming $2,133 per troy ounce on Monday before erasing some gains to settle just above the $2k threshold Tuesday morning. February gold futures rose 0.37% to $2,049/oz. Propelled by a weaker dollar and ongoing geopolitical issues, the yellow metal held its position in green territory, advancing for two consecutive months. 

Due to the precious metal’s status as a reliable store of value, it has gained a reputation as a “safe-haven” asset, or a “hedge” against inflation and political turmoil. Amid ongoing geopolitical uncertainties, including the Israel-Hamas conflict and tensions in Russia and Ukraine, investors turn to gold as a means to both protect and diversify their portfolios.

That being said, the geopolitical unrest is not the only driver behind the yellow metal. Analysts predict gold will continue its ascent in 2024, citing a weaker US dollar and possible interest rate cuts from the Federal Reserve.  

A rate cut from the Fed might propel gold even higher, as lower interest rates typically lead to a softer dollar. With the greenback down over 2.4% in the last month, the precious commodity is already cheaper and more attractive to international investors.

Further, a poll by the World Gold Council revealed that at least 24% of central banks intend on increasing their gold holdings in the new year, as their views on the buck become more pessimistic

Further Afield

In other news, all three of the major US indexes closed lower during Monday’s session. The broad-based S&P 500 lost 0.55%, while the blue-chip Dow Jones Industrial Average wiped out a smaller 0.12%. The tech-heavy Nasdaq took the hardest hit, down 0.84% to kick off the week. 

Looking ahead, investors will be paying close attention to Friday’s release of nonfarm jobs data for further economic insights. While analysts’ estimates predict 190,000 jobs were created in November, a lesser number may indicate that the Fed’s hawkish approach to battling inflation is truly starting to bite. 

In a nutshell, traders should closely monitor the ongoing Middle East conflicts, as the situation continues to impact gold prices. Evaluate dollar trends and how the greenback moves within financial markets, as it does play a significant role in the price of the bullion.