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Gold prices reached a fresh record intra-day high of $2,130 on Monday but later in the session reversed gains, as traders re-evaluated the timing of a potential Federal Reserve interest rate cut in 2024. The surge in the value of the precious metal in recent sessions can be largely attributed to factors such as declining inflation, weakening labour market data, and a more dovish stance from the Federal Reserve, leading to speculation that the central bank might start reducing borrowing costs earlier in 2024 than originally expected.
Short-term demand for gold was further fuelled by an incident involving an attack on an American warship and commercial vessels in the Red Sea, heightening concerns about a possible escalation in Middle East tensions. In a Friday statement, Federal Reserve Chair Jerome Powell maintained the view that U.S. interest rates would remain elevated for an extended period. However, subtle shifts in his language, particularly an acknowledgment of progress in curbing inflation and the potential for a “soft landing” for the U.S. economy, strengthened expectations that the Fed might refrain from raising rates in December and could potentially commence rate cuts by March 2024.
Traders currently assign an almost 97% probability that the Federal Reserve will maintain rates within a range of 5.25% to 5.50% in the upcoming December meeting. Meanwhile, there is a more than 50% likelihood that the central bank will reduce rates by 25 basis points as early as March next year, a significant increase from the approximately 21% probability just one week ago.
Source: TradingView
The outlook of declining borrowing costs is favourable for gold, considering that higher interest rates increase the opportunity cost of investing in non-interest-bearing assets like gold. This concept had negatively impacted gold prices over the past year. Given the recent breakout gold prices are poised to extend the rally to $2,250 – $2,300, and possibly remaining above the $2,000 levels for considerable amount of time. Geopolitical uncertainty, a potentially weaker U.S. dollar, and the prospect of interest rate cuts are among the key factors supporting this bullish outlook.
Conclusion:
Gold prices have witnessed significant increase over the past two months, with the Israel-Hamas conflict boosting demand for the safe-haven asset. Gold typically performs well during periods of economic and geopolitical uncertainty due to its status as a reliable store of value. The anticipated decrease in both the U.S. dollar and interest rates throughout 2024 serves as significant positive drivers for gold.
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If you are not classified as an institutional investor, you will be categorised as a private/retail investor. At this time, we cannot send communications directly to private/retail investors. You are welcome to view the contents of this website.
If you are an ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Eligible Counterparty Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.
Risk Warnings
The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.
This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.
Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.
This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.
United States Visitors
The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.
Persons accessing this website in the European Economic Area
Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).
Exclusion of Liability
Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.
Leverage Investment
Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.
Cookies
Leverage Shares Management Company may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes (click here for more information). These are statistical data about users’ browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking ‘I agree’ below, you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps Leverage Shares Company provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.
This website is maintained by Leverage Shares Management Company, which is a limited liability company and is incorporated in Ireland with registered offices at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2.
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