The CEO of Newmont Mining, the world's largest gold mining company, stated that if geopolitical conflicts worsen, gold prices may soon break records.
Last Friday, spot gold prices closed near $1992 per ounce. Since early October, gold prices have significantly risen as investors view gold as a tool for storing value during periods of geopolitical uncertainty.
In a recent interview, Newmont CEO Tom Palmer said, "In some cases, you may see gold prices breaking historical highs." Unfortunately, if these situations do happen, "it's not a good thing for our society
Previously, the price of gold reached a nominal historical high of $2072 per ounce in August 2020. At that time, the US economy was suffering from the COVID-19. At the same time, the US government adopted a "big water release" policy, which led investors to pursue gold when the US dollar was frustrated.
Earlier this year, due to the spread of the banking crisis in the US region, gold prices almost broke this record. As for the current situation, although high interest rates may suppress the prices of non yielding assets such as precious metals such as gold, the strong demand for gold from central banks in various countries provides strong support for gold prices.
Recently, the Global Gold Demand Trends Report released by the World Gold Council showed that global central banks net purchased 337 tons of gold in the third quarter, and the net purchases of central bank gold from the beginning of the year to date reached 800 tons, setting the latest record since the association tracked this data.
Despite market insiders warning that the phenomenon of safe haven funds flowing into gold due to geopolitical events is often short-lived, traders are still concerned that the conflict may spread. Palmer said, "The situation we have seen in the past few weeks is one of the reasons why gold remains at its current level
In addition, the market's belief that the Fed's interest rate hike is nearing its end is another important reason to support the rebound in gold prices. Last Wednesday, the Federal Reserve did not raise central bank interest rates for the second consecutive meeting, marking the first time in this tightening cycle, leading the market to believe that rate hikes are nearing their end.
Palmer commented, "I believe there are many fundamental factors that have enabled gold prices to remain at their current level." As he commented, Newmont completed the largest transaction in industry history - the acquisition of Australian mining company Newcrest for approximately $15 billion, consolidating its leading position.
Palmer said, "This transaction is the largest in the gold industry and one of the largest in the mining industry. Half of the world's top gold mines will be included in our investment portfolio