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Gold reaches unprecedented high amid economic uncertainties

Gold has rallied strongly over the past week reaching a fresh intra-day record high of $2,160 per ounce on Wednesday amid expectations for interest rate cuts in the U.S. and global geo-political tensions. Gold generally attracts buyers in times of instability and given the current geo-political uncertainty, the upward momentum is likely to extend throughout 2024.

The expectation of monetary policy easing stems from the Federal Reserve’s ongoing evaluation of the economy’s condition, highlighted by Federal Reserve Chair Jerome Powell’s hint at potential policy adjustments in 2024. The timing of such interventions is critical to achieving a balanced approach without precipitating or lagging behind the economy’s actual needs.

The price of the precious metal is likely to remain volatile in the coming months as the market reacts to macro drivers, tracking geo-political events and the Federal Reserve stance on interest rates. However, we are of the view that gold prices are likely to trade higher in 2024 as safe-haven demand is likely to support prices.

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