Gold prices tumble while US small cap stocks reach new all-time high
Factors such as potentially reduced conflict in the Middle East and the nomination of Trump’s Treasury pick may have contributed to the recent stock rally.
Reports of a potential cease-fire between Israel and the Hezbollah terrorist group led to a decline in gold prices on Nov. 25, while stock markets saw significant gains.
Spot gold prices started at $2,715 per ounce and dropped over 3.3 percent to close at $2,625 per ounce on Monday. This decrease followed five consecutive days of price increases, wiping out gains from the previous three days.
Israeli Ambassador to the U.S., Michael Herzog, mentioned in an interview that Israel and Hezbollah were nearing a cease-fire deal that could be reached in the following days, although some unresolved issues remain.
Recent tensions in the region have boosted the demand for gold as a safe-haven asset.
However, the appointment of Scott Bessent, a hedge fund manager, as the head of the U.S. Treasury Department by President-elect Donald Trump, has put pressure on gold prices, reflecting a more positive economic outlook and reducing the need for safe-haven assets.
Analysts believe that Bessent’s appointment and the potential peace talks in the Middle East served as catalysts for the stock market surge on Monday.
Gold Price Predictions
According to a recent update from ING Bank, the potential easing of tensions in the Middle East may negatively impact precious metals like gold, but other factors such as geopolitical issues and Federal Reserve policies could continue to support the gold market.
JP Morgan forecasts a strong case for gold prices to rise further next year and achieve new highs. They believe that central banks, especially in emerging markets, will continue to drive demand for gold as a means of diversifying their reserves amidst global currency fluctuations.
The World Gold Council’s recent report highlighted a 5 percent year-over-year increase in total gold demand in the third quarter, reaching a record high of 1,313 tons. The report also indicated strong interest in gold, with total demand exceeding $100 billion for the first time in a third quarter.
Gold exchange-traded funds experienced their first positive quarter since the beginning of 2022 in the third quarter of this year. Analysts expect investment flows in gold to remain strong, with economic growth prospects and global uncertainties influencing market dynamics.
