The price of gold has scraped the $2,000 mark for the first time since May. Want to find out why? More importantly, do you want to know if the upward trend will continue?

Media outlets are currently reporting that the price of gold is rising due to the conflict in the Middle East. Indeed, the price of the yellow precious metal has risen by around $170 since the radical Hamas assault. A link between the two events is clear. Gold is usually in high demand in times of uncertainty as a safe haven.

Follow the lead of central banks However, the rise in gold prices is not solely due to the Gaza War. According to tagesschau.de, demand from central banks is also playing a role. The figures from the World Gold Council show that central banks have purchased 800 tonnes of gold since the start of the year, 14% more than in the same period last year, a new record.

„Given the future outlook and increasing geopolitical tensions, as well as expectations of further steady purchases by central banks, gold demand could deliver a positive surprise,“ says Louise Street, market analyst from the World Gold Council, on tagesschau.de.

The influence of foreign exchange and bond markets The easing of pressure on the foreign exchange and bond markets is also driving gold prices upwards. In general, the development of the foreign exchange market is closely linked to that of gold prices. As gold is traded in dollars, it becomes more expensive in non-dollar countries when the dollar rises, thus reducing demand. According to tagesschau.de, pressure from the foreign exchange market had noticeably lessened since the start of October, which has spurred the gold price.

In addition to foreign exchange markets, the bond market is also playing an important role in the gold price, as gold itself does not generate interest. If the yield on bonds rises, this means that they become more attractive, while gold investments become less attractive. In focus are 10-year US bonds and real interest, i.e. nominal interest minus inflation.

Further interest rate rises unlikely After the sharp rise in the yield on bonds, a sideways movement is now more likely. A further rise is considered unlikely, as the US government had strong tax revenues recently. Therefore, a new issue of bonds is probably not on the cards. In addition, a weakening of economic growth is expected. Market observers therefore assume that the US central bank Fed will not raise interest rates any further. This would also mean that the yield on bonds would stagnate or fall.

Uptrend likely from a technical perspective Let’s now come to the most interesting question: How will the gold price develop in the future? Is it worth entering despite the high price? According to tagesschau.de, gold has a lot of room to move upwards from a technical perspective. The uptrend is intact. „Gold has been moving in a tight range since mid-2020.

From a technical perspective, the chances of a sustainable break above the $2,000 mark are now good. Afterwards, the gold price could rise to $2,300,“ says Robert Rethfeld from Wellenreiter Invest on tagesschau.de.

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