Factors Fueling the Current Gold Price Hike

Gold Spot price has been on the rise in recent days. In general, gold is one of the most stable and popular commodities in the world market, which makes it a quintessential asset for investors. Over the past few decades, gold has evolved into a symbol of stability and reliability, especially during tumultuous economic periods when investors try to safeguard their wealth.

For many years, gold has also served as a hedge against inflation. When inflation expectations are high, investors frequently turn to gold to preserve the value of their assets. Thus,  rising inflation leads to increased demand for gold and, as a result, to a subsequent surge in its market value.

The interplay between supply and demand is a critical factor affecting the price of gold. Political instability or global uncertainties often boost the demand for gold, resulting in an upswing in its value. Conversely, an increase in supply tends to drive its price downward.

However, it should be noted that investment preferences primarily determine the demand for gold, which can fluctuate in response to various economic and political events. This year, gold has outperformed the S&P 500, which has seen a three-month decline.

Gold Spot vs USD 1 Week Chart

Gold's recent surge is mostly attributed to the October rally triggered by the conflict between Israel and Hamas. The escalation of the situation in the Middle East forced investors to seek refuge in safe assets, with gold being a traditional choice.

Furthermore, political instability in gold-producing countries can also impact its price. In cases of military conflicts or political upheaval in these regions, investors may become concerned about the stability and quality of gold supplies, causing its value to rise on the exchange. While the Middle East may not be a major gold-producing region, the resource remains fundamental, and such geopolitical factors exert influence.

In summary, several factors contribute to the current uptrend in the gold exchange rate. Foremost among them is the demand for gold as a protective asset during times of economic instability. Additionally, speculative demand plays a role as investors anticipate further price increases. And of course the limited supply of gold further propels its price.

As of now, the primary objective for gold bulls is to breach the $2000 resistance level, a milestone that appears likely in the near future. The subsequent target is the $2040 mark, although a rapid surge beyond this level is less probable, suggesting that the price may consolidate within this range for some time.

Gold Spot Vs USD 1 Day Chart

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