The yellow metal has recorded unprecedented records in the global markets – recently – in light of an investment wave described as “crazy” with investors seeking safe haven amid the increasing state of economic uncertainty in global markets, which prompted the price of an ounce to break the barrier of $ 3500 two days ago in light of the escalating fears of possible global stagnation and the growing financial and economic pressures on major global economies.
Analysts now expect the yellow metal to reach 4 thousand dollars just weeks after the price exceeded $ 3,000 for the first time, according to the British Guardian.
Muhannad Erekat, chief financial analyst at CFI International – to Al Jazeera Net – said that gold recorded an increase of about 33% since the beginning of this year “and is so far the largest annual increase since 1979, and also recorded a rise during April by about 12% and is also considered the largest rate of monthly rise since August 2011”.
Height factors
Erekat added, “All of these gains made him ascend to the highest levels ever near 3500 dollars an ounce, supported by a set of factors,” the most prominent of them:
- The strongest demand is expected and the doubling of central banks from their possession of gold is about 5 times since 2022, which is considered a shift in the management of strategic reserves.
- Flows accelerated to the investment funds circulating due to increased fears of global economic recession.
- The continuation of the uncertainty related to the customs tariff policies imposed by US President Donald Trump, which threatens the chances of recession, and this is what the President of the Central Bank, Powell, agreed that these fees will undermine the bank’s ability to contain inflation and enhance growth and threaten to destabilize the labor market.
At the same time, the dollar fell to its lowest level in 3 years after Trump has pressured pressure on the federal reserve, calling for sharp discounts in interest rates, noting that he is studying the dismissal of the Federal Reserve, before he retracted the call to reduce the cost of borrowing.
Fears of political intervention in monetary policy have shook the dollar. Meanwhile, Trump’s threats – to impose customs duties, including a new investigation of basic metal imports according to the White House – have increased concerns about slowing growth and high inflation, and these factors combined have led to a high demand for gold as a safe haven.
But will gold continue its standard increases after the current causes of tension ended? Can he recite and return to his level before the Trump era?
In our attempt to answer this fundamental question, we will first learn about the following:
Acute gold fluctuations throughout history
Gold performance shows since 2005 until now that the levels near $ 1380 an ounce and 2075 levels are the most prominent stations in the path of height of gold, as they were representing a resistance area, and every time gold was exceeding those areas we were witnessing successive heights on gold prices, according to Erekat.
If we go back a little back, the price has witnessed several great fluctuations during the past decades, according to the “Macro Trands” platform, and it has reached its highest level in 1980 after its lowest levels in the 1970s.
In recent years, gold has reached a higher level, leasing a record of $ 2265 for an ounce in early April 2024, to witness a new historic rise in April.
Fluctuations
Over the past 50 years, the yellow metal has witnessed sharp and witnessed fluctuations, according to the “Macro Trands” platform. The changes in the price of gold in part from the following prominent events resulted in the Investubia platform:
- The end of the Bretton Woods system in 1971, which allowed the US dollar to float freely, ended the fixed exchange rate between gold and the dollar, and this period also witnessed the peak of the inflationary recession crisis in the United States, which was characterized by high inflation, low economic growth, and high unemployment rates.
All this led to a sharp rise in gold prices in the 1970s, reaching its highest level at about $ 665 in January 1980. - The price of gold reached its lowest level locally at about 253 dollars per ounce in 1999, due to the strong performance of the American economy and the strength of the dollar, which reduced the attractiveness of gold as an alternative investment, and its price decreased due to the surplus of the market, as many central banks sold their yellow metal reserves to raise money and diversify their investment portfolios.
- The great recession that occurred after 2008 led to an escape to safe haven and increased demand for gold, and its price increased from about 730 dollars in October 2008 to $ 1300 by October 2010.
- The European sovereign debt crisis between 2010 and 2012 raised concerns about the stability of the eurozone and the global economy, and the price of gold reached a new standard level of about $ 1825 in August 2011.
- The “quantitative facilitation” policy conducted by the American “Central” during the 2013-2014 period indicated a gradual normalization of monetary policy and the promotion of the dollar, and the price of gold decreased by 29% from 1695 dollars in January 2013 to $ 1,200 in December 2014.
- Corona’s pandemic in 2020 and 2021 caused unprecedented unprecedented disturbances, and the price of gold increased by 27% from $ 1575 in January 2020 to more than 2000 dollars by the summer of 2020.
- After the peak of the pandemic, the gold prices fell to a trading range between 1700 and 1900 dollars, before it rose in late 2023 to new standard levels at about $ 2135, and then fell to a trading scope slightly higher than $ 2000.
- In April 2024, gold rose to new records exceeding $ 2265 an ounce, driven by the growing Chinese demand and continuous fears about inflation.
Currently, we are witnessing a new wave of high gold prices that have reached record levels.
We return to the previous question: Can gold be used and return to its level before the Trump era?
The answer is not easy due to the entry of many factors that play prominent roles in the price of gold, and according to the financial expert Erekat, “the continued achievement of gold for gains is associated primarily on the extent of the factors that originally led to its height, the most important of which is the state of economic uncertainty, high inflation and recession concerns.”
In the event that these factors are abused, Erekat expects the gold to decline and the price of an ounce is due to the levels close to $ 2,500.
But Erekat added, “There are no real indicators yet because the reasons that led to the rise in gold, especially with the escalation of the trade war between the United States and China and its reaching new unprecedented levels, too.”
A historical fact remains worthy:
- In February 1915, in the midst of World War I, the price of gold reached $ 615 an ounce, and after the war it declined to reach $ 320 in May 1920, according to the Macro Trands platform.
- Gold then continued in a movement of climbing to a new summit of $ 841 an ounce in May 1934, after which the gold witnessed a curve of decrease in the faces in December 1970, reaching a bottom of $ 293.
From the above, it turns out that the peaks are followed by two bottles, and the bottoms are followed by new peaks, and all of this has a direct or indirect relationship with geopolitical events in a world that has become smaller than a small screen in the fist.
