When Will Gold Prices Peak?

On Wednesday (October 23), in the Asian trading session, spot gold experienced a temporary decline, falling to a low of $2737.84 per ounce. However, the gold price then continued to rebound, and just now it touched $2753.18 per ounce, setting a new historical high.

The gold price has been climbing steadily, breaking through historical highs one after another. How long will this upward trend continue?

It is well-known that gold price fluctuations are influenced by a combination of factors including the trend of the US dollar, the global economic situation, geopolitical tensions, supply and demand balance, inflation rates, market expectations, and speculative activities.

This year, the international gold market has repeatedly broken historical price records, demonstrating its strong growth momentum. There is an inverse relationship between the US dollar and gold, with the "US Dollar Index" being an important measure of the value of the US dollar.

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Whenever the gold market enters a bull market, there is always one or more factors that weaken the value of the US dollar. These factors may include challenges to the credibility of the US dollar as a global reserve currency, a decrease in the purchasing power of the US dollar due to high inflation, or monetary easing policies triggered by a recession in the US economy. A recession in the US economy not only implies a weakening of national strength but may also lead to more currency issuance, thereby reducing the value of the US dollar.

In addition, the safe-haven characteristics of gold remain one of the key factors driving its price increase. Currently, the global geopolitical situation continues to be turbulent, with escalating regional conflicts and other uncertain factors leading to a surge in global risk aversion, and the value preservation function of gold is highly sought after.

At the same time, the Federal Reserve has officially entered a rate-cutting cycle. Historically, rate cuts by the Federal Reserve have often been accompanied by an increase in gold prices. Rate cuts mean a relaxation of monetary policy, raising inflation expectations, reducing the cost of holding gold, and thereby increasing investors' demand for gold. Moreover, the US dollar usually depreciates during the rate-cutting cycle, making gold more attractive to non-US investors and further stimulating demand for gold investment.

In the future, the Federal Reserve will hold two more interest rate meetings in November and December, and the market expects that the Federal Reserve may cut rates by 25 basis points or more at these two meetings. In the short term, the Federal Reserve's rate-cutting process is expected to provide support for gold prices.

Taking into account the above factors, gold prices still have the potential to continue rising.