Gold has an almost mythical appeal for both traders and investors. It’s one of those things that never seems to lose its value. It is because it is pretty when worn on a finger or because one recognizes that when all other assets look set to be in a meltdown mode, there is always gold to fall back on. Given the current state of affairs where geopolitical unrest is on the rise and several central banks globally are contemplating yet another round of rate cuts, it does appear that we are getting closer to that actualization where gold is quoted at $3000 an ounce.
Yes, you heard me. $3000 an ounce.
You may want to brace yourself for another possibility – perplexingly if the next U.S. election happens to favour D. Trump, expect gold inflows that will crank new levels that have never been attained. To put it this way in a manner that does not sound like a crazy conviction of ‘gold bugs’ – let’s start with how plausible this is, so that it does not come across like a crazy poster asking “how plausible is it”. The current geopolitical trends and expectations are informed by sound market fundamentals which are changing. So, let’s get immersed into it.
What was next?” An Overview of Gold Prices
Currently, gold fluctuates at the prices of staggeringly $1900 – $2000 per ounce, which is near par with very old records on prices. Attempts to comprehend filling $1100 back in gold history seem like ages ago and now purportedly $2000 supposed to be the “new normal.” If you only watch the news, therefore that may sound arbitrary. If you stare at the macro picture, though, it should not come as a surprise.
It is pray quot and distress that we are using due to the fact that it implies that this is a cool period for everyone. The last quota was set at this level until opposed inflation gave rise to some unrestricted fad pay politicking. Chaos of global proportions seems to happen almost everywhere these days—like every other month. In chaos, gold shines—when uncertainty rules even over issue currencies or the whole market is shaky, the yellow metal appears as the best alternative.
Well, how did we come to this point? What is it that is driving gold to these levels, and why do I think we are going to $3000? Here is my understanding on this:
Getting Help from the Federal Reserve & the Cost of Borrowing Gold
Interest rates are often cited among the key factors influencing the price of gold and, in regards to this they have been playing tango with these rates like someone with split loyalties. For most of the previous decade, we have lived in an era where the rates of interest where greatly reduced, and this did a very good job of supporting the prices of assets. When the interest is low, the opportunity cost of holding gold is on the lower side as well. He is correct, because for such situations people do not lose on investment by holding their gold.
Nevertheless, after the Pandemic, the inflation monster decided to get in on the action. The Federal Reserve had no option but to pivot and to start doing whatever it takes to control inflation, which included raising interest rates. That dampened the growth increase of bling for some time but right now, it appears we are at a new inflection once again.
While there are signs that inflationary pressures are receding, there is still more room for the Fed to raise rates without doing damage to the economy that cannot be repaired. We have already seen the implosion of banks like Mikhail Mihailovic Silicon Valley Bank, and there is a feeling that if the economy swings any more in the tightening direction, we will have a great depression. So, what’s the Fed to do? They might quite literally press the red button quicker than we all thought.
Rate cuts, that Wall Street even puts on the calendars. Well, that’s music to gold’s ears now, isn’t it. Holding expenses regarding gold will be lower as the interest rates are low and that also implies weakness in the dollar, another positive for gold prices. In general, whenever there are cuts in rates and uncertainty regarding the economy, gold silences all the naysayers.
When Can We Expect the Rate Cuts to Take Effect?
There’s plenty of guesswork about what the timing of the subsequent series of cuts will look like. Some market analysts are betting they wouldn’t be surprised to see rate cuts announced in mid-2024. If that happens, wars may be imminent and gold may begin its next major leg up. And if the Fed goes ahead and makes such a signal that they will back the economy by liquidating interest rates, there could be a jostling in gold as a number of persons would seek to escape the looming figure of the dollar and inner pressures of inflationary levels.
Recall, as investors expect long-term interest rates will start easing, they tend to buy gold in anticipation. It's not the eventual cuts that matter but the time when the market anticipates the cuts. And we are not too far away from that shift in sentiment
Geopolitical Tensions: The Final Fortress For Gold
If rate cuts are the spark, then geopolitical tensions are the incendiary. Just scan your environment, there is strain in almost every part of it. It is still the case that within Ukraine, Russia and Ukraine, the hostilities are far from abating and now we are having more bumps in the Middle East including Israel Hamas skirmishes. These continents effects policies and management of economies to the negative impacts on financial systems because of the possible implications of such events in energy rich regions.
During wars and crises making international boundaries gold has been the currency for nations. For the simple reason that it is not dependent on the economy of any nation, it is widely regarded as the most ultimate form of the investment, which is immune to the internal fluctuations in that its value is common during the external transitions as in wartime. As now where there is great global instability people run towards gold for the simple reason that it is not dependent on the credit worthiness of the government or any financial institution.
We do not see political risk diminished any time soon. If anything, we are likely to see a worse environment before it gets better. When two or more important geographical regions go into chaotics, investors tend to look for geographies where their money would not disappear as it did the last time. Gold would meet this requirement without hitches.
What’s the next step for Geopolitics
It is difficult to point to any geographic region and predetermine what the next geocentric violent conflict will be. Hard decisions have to be made about peace and internal cohesion as we currently stand. If conflicts escalated, especially with the involvement of powerful states, gold could soar and has no limit whatsoever. The Middle East remains particularly volatile, and any further aggravation can lead to skyrocketing oil prices and destabilize the markets forcing the investors into gold.
Still, if you think the current situation is volatile, try to maintain it for some time, i.e. more warmth from globalisation, more likelihood of wars, etc. don’t blame the rest who see as realistic than you hope.
The Trump Factor: 2024 Election and Gold’s Future
Said anything that could be used as a reason for a peaceful stand-off: but Donald Trump could actually be the only thing that send gold prices sky rocketing.
Don’t jump to conclusions just yet. But if Trump ever assumes the presidency once more then it’s really possible that gold might go higher and this is the reason why. The man is a maverick type of leader. The first time Trump was president, there were many market disruptions due to his trade wars, strange rules, and squabbles with heads of other countries. No one prefers uncertainty when it comes to the economy, and with Trump, it is all uncertainty.
The Impact Of Policies Made By Trump
One of his main goals was to try to devalue the US dollar to make US goods to be sold more overseas. We can expect him doing the same practice if he comes back to the Presidential office once again, and this is favorable to gold. A weaker dollar has the effect of raising gold prices, as gold is dollar-denominated. So, when the dollar decreases in value, it means that gold would be less expensive for other markets boosting the market.
On top of that, policy wise, trump’s policies are known to cause some degree of political tension. Be it with China through trade policies or in the Middle East, it is almost a given that a Trump administration could give rise to more global market turbulence. And as we have seen in our coverage, turbulent market conditions and political risks are the best environments for gold to shine.
The Parallels of Trump Presidency and 3000 USD Gold Price
I am quite sure that the gold price shall hit that level, especially if Trump wins the elections. However, that is not too far-fetched. A cut in rates, the problems in different regions, and senatorial mafia Trump’s economic policies can all combine to be a gold rush. Investors might search for places to invest in order not to be caught up in the expected despair in the global markets.
Bear in mind, during Trump’s first tenure, gold tended to rise up a lot especially during the periods when trade fights with China were in the news and hyped. Forking just one term of “America First” policy and one term of trade interference is likely to lead to something similar if not worse to those market conditions.
Nations Are Buying All The Gold They Can Find
But what is further bolstering the surge in the price of gold is the attitude of Central Banks. Recently there has been a trend where all the world's central banks have been accumulating gold in excess of twenty per cent. This is indeed a show of a strong belief in the metal and it indicates that even the institutions are looking for protection from anti-globalism.
China and Russia, in specific, have been accumulating gold as a strategy to protect themselves from moving away from the US dollar. They know what’s coming. People are shifting, and gold is an insurance for that. The more these countries manage to de-dollarization, the more we will see higher gold prices.
Another point to consider is that some of the states are starting to rethink the status of the United States dollar as the global reserve currency. Once we see that change in international trade and commerce, gold would be something that central banks and investors would want to, even more than they do now.
Will We See $3000 Gold?
Having established that, are we going to see $3000 gold no matter what? Not really. I would not say it’s a done deal but all the pieces are in place. Rate cuts, geopolitical unrest, the possible return of Donald Trump to the White House all set the stage for a steep jump in gold price.
As ever, some things cannot be predicted with any degree of certainty. However, in those circumstances, if the global economy somehow normalizes, inflation subsides, and the policies of financial institutions are to keep high interest rates for an extended period of time, gold prices are likely to remain stuck for some time. That does not seem so likely as we get into 2024 and more.
In the coming years, gold is going to be certainly one of the most profitable assets, and for those who have not started paying attention to it, now is the best time to do so.
Conclusion: How to Prepare for the Skyrocketing of Gold
If you are an investor or a trader, it is advisable that the time to start worrying about your gold investments has come. Whether geographical gold is purchased, gold is bought in the form of ETFs or traded through CFDs, the ways to take advantage of the possible increase are many.
The important thing here is to know the macro factors at play and place yourself with those factors in mind. We are getting into a period which is uncertain on almost all fronts; economically, politically and geostrategically, and gold is the asset that does well in those times. $3000 gold is my prediction, and provided that the narrative comes together in the manner that I envisage, it is a price we could achieve sooner than most would believe.
When it comes to investments, it is important always to be one step ahead. And now gold seems to be ready for the next leap.
