- Gold prices have experienced a significant surge due to geopolitical tensions and the Federal Reserve's easing of interest rates
- Prior to the Israeli-Hamas War in October 2023, gold prices were at a lower level, with a price of US$1833 per ounce at the end of September
- However, the geopolitical tensions and geo-economic fragmentation have had a broader impact on other commodity prices
Harare- Gold prices have concluded the month of November 2023 above the notable threshold of US$2040 per ounce, buoyed by the geoeconomic fragmentation and the Federal Reserve's easing of interest rates.
Since the Israeli-Hamas War erupted on October 7, 2023, gold prices have soared, maintaining an upward trajectory throughout the month to date.
Prior to the onset of the Hamas war, gold concluded September at a price of US$1833 per ounce.
However, by October 30, the prices per ounce had experienced a significant surge, reaching US$2000.
Gold has experienced a significant increase of US$221.15 per troy ounce or 12.12% since the beginning of 2023, as reported by trading on a contract for difference (CFD) that tracks the benchmark market for this commodity. Historically, gold reached its all-time high of 2074.88 in August 2020.
Gold is primarily traded on the OTC London market, the US futures market (COMEX), and the Shanghai Gold Exchange (SGE). The standard future contract for gold is 100 troy ounces.
The largest producers of gold are China, Australia, the United States, South Africa, Russia, Peru, and Indonesia. On the other hand, the biggest consumers of gold jewellery are India, China, the United States, Turkey, Saudi Arabia, Russia, and the UAE.
Due to geopolitical tensions and geo-economic fragmentation, commodity prices have experienced a decline. The wars have resulted in trade barriers, sanctions, and an increased tightening of interest rates aimed at curbing inflation. These factors have collectively contributed to the downward pressure on commodity prices.
The resulting slow economic growth and uncertain conditions have prompted investors to seek refuge in gold as a safe haven asset.
Half of the world's gold consumption is for jewellery, while 40% is for investments and 10% for industrial purposes.
Consequently, gold prices have experienced a significant surge, rising from a low of US$1.8k per ounce prior to the outbreak of the Russian aggression war on Ukraine to a high of US$2040 following the onset of the Israeli-Hamas conflict.
The ongoing geopolitical tensions have hampered industrial activity, as major economies prioritise addressing domestic inflation and funding military conflicts. Consequently, there have been significant declines in several major commodities.
Year-to-date, coal has witnessed a staggering decrease of 67%, lithium has plummeted by 78%, and platinum has experienced a decline of 10%. Palladium has seen a significant drop of 47%, while rhodium has fallen by 66%. Additionally, aluminium has decreased by 10%, Lead by 3%, and cobalt by 35%.
These commodities play a vital role in economic development, which raises concerns for global markets given the current situation.
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