Quick Bite | Gold price shines as demand for safe-havens increases

In times of elevated economic and geopolitical uncertainty, the demand for safe haven assets such as gold increases. This can offer protection and minimise portfolio volatility during market turbulence.

Since the tragic outbreak of conflict in the Middle East, the spot Gold price has rebounded strongly, rising +10% from early October 2023 and is now trading above USD 2,000 (as of 30^th Oct 2023). This is now within reaching distance of its all-time high of USD 2,074, recorded in August 2020.

Figure 1 – Spot Gold Price (10 Years)

Looking at the historical spot Gold price in US dollars, it is risen 53-fold over the past 53 years, with most of the substantial gains occurring in the last two decades. This trend has been underpinned by the significant surge of growth in global debt levels and money printing.

What are the potential implications for markets? If geopolitical tensions continue to escalate, it is anticipated supply-side issues will worsen, translating to higher-than-expected inflation levels and market volatility. With central banks appearing to have exhausted their options for rate hikes, there are increasing concerns that a new wave of inflation could provide additional support and strength in the Gold price.

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