Gold has broken through the $2,100 barrier. Is it preparing for new price jumps?
In a notable development, gold prices recorded a significant rise, reaching $2,135 per ounce on December 4, 2023, before retreating within a few hours to stabilize around $2,060.
This increase responded to several key factors, most notably the decline of the U.S. dollar index and ongoing expectations that the Federal Reserve might adjust its monetary policy by lowering interest rates in the first half of 2024.
These changes come in the wake of slowing U.S. inflation data, enhancing the appeal of gold as a safe and reliable investment asset, especially amidst ongoing conflicts in the Middle East and Europe.
This increase was not an exception or a coincidence, but an extension of previous and successive movements. On the evening of Friday, December 1, 2023, gold rose to record levels of $2,070 per ounce, benefiting from the weakening dollar index and slowing U.S. inflation data, which bolstered expectations of a policy adjustment by the U.S. Federal Reserve. These changes directly impacted the Egyptian market, where local gold prices saw a noticeable rise, with the price of 21-karat gold surpassing the 2,800 Egyptian pound mark.
The Egyptian gold market is affected by several external and internal factors, including "supply and demand, U.S. Federal Reserve policies, geopolitical events, and economic policies." These price fluctuations in the gold market are an indicator of the current economic and geopolitical situations.
This jump in gold prices did not come as an unexpected surprise to analysts and experts; in an interview with Dr. Fady Kamel, the Executive Director and Chief Analyst at "Dahab Masr," with Al Sharq channel dated April 27, 2023, he predicted that gold might exceed the $2,100 barrier by the end of the year. He emphasized that the decision to buy or sell gold depends on the investor's view of gold as an investment asset, highlighting the importance of considering gold as a long-term investment and encouraging investment in it as a hedging tool rather than for speculation or quick profits.
According to estimates by the "Dahab Masr" expert team, gold is expected to surpass the $2,200 barrier before the end of the second quarter of 2024. These expectations reflect confidence in the sustainability of rising gold prices in the near future, encouraging investment in it as a means of hedging and long-term investment. This is corroborated by a report from the World Gold Council (WGC), which shows that 24% of all central banks plan to increase their gold reserves in the next twelve months, especially with their growing pessimism about the U.S. dollar.