- Gold increased by 3.1% on a weekly basis
- This was buoyed by the stalled benchmark interest rates by the Fed
- Geopolitical wars and droughts continue to validate gold as a safe haven, contributing to its value appreciation
Harare- Gold, a safe haven asset, experienced a 3.1% surge to reach US$2,100 in the early hours today. However, it later relinquished a significant portion of those gains, though it still reached new record highs of US$2070 per ounce which is still one of the best performances this year.
This performance comes in the midst of increasing speculations that the US Federal Reserve will maintain its current interest rates in the upcoming meeting and potentially begin reducing rates in the following year after maintaining them stable in its latest meeting.
Gold and the US dollar have emerged as safe haven assets amidst the global economic catastrophe. The world is currently grappling with an economic crisis that originates from various factors, including El Niño and geopolitical tensions. These challenges have compelled central banks to raise benchmark interest rates to levels not seen in decades.
With major economies, which also serve as the primary markets for commodities, increasing interest rates to combat inflation, it suggests that productivity has slowed down and scaled back. Consequently, this has resulted in reduced demand for commodities needed for industrial advancement.
The global economy is confronting significant challenges due to various geopolitical tensions. Conflicts such as the Russia-Ukraine War and the Hamas-Israeli War, along with trade disputes involving major economies like the United States, the European Union, the United Kingdom, China, and Russia, have created a volatile environment. These nations collectively contribute to a substantial portion of the global economy, accounting for over 75% of its output.
As a result of these factors, economic projections indicate a decrease in global growth from 3.5% in 2022 to 3% and a further decline to 2.9% in 2024. These geopolitical and trade uncertainties are contributing to a less optimistic outlook for the global economy in the coming years.
According to trading on a contract for difference (CFD) that follows the benchmark market for gold, the price of gold has risen by US$249.64 per troy ounce or 13.68% since the start of 2023.
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