The escalation of tensions between Russia and Ukraine has intensified geopolitical concerns, prompting investors to seek safe haven.
After a brief pullback last week, gold prices have regained their upward trend this week.
On Thursday (November 21), spot gold rose to $2660 per ounce during trading, marking the fourth consecutive trading day of gains and setting a new high in nearly two weeks.
Since the beginning of this year, gold prices have risen by over 28%, mainly due to central bank purchases, the Federal Reserve's shift, and geopolitical tensions in Europe and the Middle East.
Goldman Sachs expects gold prices to further rise to $3000 per ounce by the end of next year, while UBS expects gold prices to reach $2900 per ounce.
Geopolitical situation triggers safe haven buying
A knowledgeable Western official stated that the Ukrainian armed forces have launched British cruise missiles at military targets within Russian territory for the first time, marking a new phase in the 1000 day conflict.
At the same time, Russia has stated that it is ready to negotiate with US President elect Trump on the possibility of a ceasefire with Ukraine, despite skepticism from Western officials.
Earlier this week, Russian President Putin signed an updated nuclear policy, stating that if Russia is attacked by conventional missiles supported by nuclear powers, it may consider using nuclear weapons as a response. Geopolitical tensions have driven the rise of gold.
In addition to the Russia Ukraine situation, the Middle East remains tense, which also provides support for gold prices.
According to the official website of the United Nations and CNN, on November 20th local time, the United Nations Security Council voted on the Gaza ceasefire resolution proposed by 10 non permanent members. Due to a veto by the United States, the resolution was not passed. The other 14 countries of the Security Council voted in favor.
In addition, on November 20th local time, the Israeli army attacked a house located in the Sheikh Radwan community in the north of Gaza City, resulting in 66 deaths and dozens of injuries.
In a report, Suki Cooper, an analyst at Standard Chartered Bank, said, "The intensification of geopolitical risks, coupled with widespread market uncertainty and growing concerns about unknown risks since the outbreak of the pandemic, has reignited people's interest in the gold market as a safe haven asset
But macro factors, including the US dollar and expectations of interest rate cuts, may set the tone in the short term, "he said.
Investors' attention is also focused on several Federal Reserve officials who will give speeches this week. The market's expectation for a rate cut in December has significantly decreased, and the probability of a rate cut is now 55.7%, lower than 82.5% a week ago.
ANZ Bank stated in a report that "the Federal Reserve's suspension of interest rate cuts in December may suppress gold prices in the short term, but a loose monetary cycle, macroeconomic and geopolitical uncertainty, and healthy physical demand will maintain positive sentiment in the gold market
Brokers believe that the tariffs proposed by US President elect Trump will exacerbate global market volatility, stimulate inflationary pressures, and limit the space for major central banks to relax monetary policies.
Gold is seen as a tool to hedge against inflation, but higher interest rates reduce the attractiveness of holding this non yielding asset.
Gold prices will hit $3000 next year!
Peter Spina, President and CEO of GoldSeek.com, stated that the larger trends in gold continue - including de dollarization and strong central bank buying. He said that apart from short-term events, gold has entered a "several week consolidation phase".
Spina said that if this happens, by mid year, the gold price seems to reach "$3000 per ounce". But the uncertainty of current events in Europe has delayed this time.
For now, it's best for investors not to chase big gains and see the next few weeks as a window to accumulate gold at a price close to $2500 instead of $3000, which may appear more expensive in the short term.
The gold bull market will develop into a larger bull market - gold prices will rise significantly in the coming years, "Spina added. This is a bull market that has lasted for many years, so a pullback is still an opportunity to establish valuable protection in a world full of uncertainty and distrust
He said that in 3 to 4 years, the price of $3000 in gold will 'look cheap'.
Recently, Goldman Sachs and UBS also reiterated that gold will reach new highs in the next two years.
Goldman Sachs predicts that by the end of next year, gold prices will climb to $3000 per ounce.
UBS Group stated that there may be a period of consolidation before gold prices begin to rise again, due to the strengthening of the US dollar and concerns that more fiscal stimulus from the US could lead to higher interest rates. However, by the end of 2026, the gold price will further rise to $2950 per ounce.