World gold prices have reached a remarkable milestone, reaching an all-time high of more than 2,100 USD/ounce on December 4, while Bitcoin prices have surpassed the psychological level of 40,000 USD.
This remarkable increase was reinforced by a number of factors, especially the US Federal Reserve's predicted dovish shift policy and a weakening USD.
Investors reacted positively to Federal Reserve Chairman Jerome Powell's comments, creating confidence that the central bank has ended monetary tightening, potentially creating a premise for interest rate cuts to begin in March.
As the appeal of gold increases along with interest rates gradually decreasing, this precious metal will fall between what could be described as a "perfect storm" in 2023.
The market recovery in November reflects optimism about risky assets
With the rise of gold, global stocks have ended their most significant monthly price increase in three years.
Investors are enthusiastically embracing risky assets, driven by the belief that major central banks, including the Fed, are gaining a foothold in the fight against inflation.
November saw strong growth in the stock market, with the S&P increasing by 9% and Nasdaq surpassing with an impressive increase of 11%. This is the most notable increase since 1980, reflecting widespread optimism surrounding potential interest rate cuts and more appropriate monetary policy.
Silver price increases
While gold is attracting attention, silver is ready for a revival. Despite falling behind gold in recent weeks, silver is still trading at its highest level since July, the price of silver futures in March 2024 was at 25.895 USD/ounce.
The market is witnessing a remarkable increase in industrial demand for silver, positioning silver as an attractive asset.
Analysts highlight the attractiveness of silver to gold, with the gold- silwer ratio exceeding the historical average.
According to RT, when the Fed moves from a tough stance to a dovish stance, it will cause something that traders often have a fear of missing out syndrome (FOMO - fear of missing out). This is a psychological syndrome of traders, with a feeling of fear and insecurity when feeling that they are missing opportunities when the market exceeds expectations.
The initial signs of this transition are clearly shown in the decline in the USD, due to speculation about the Fed's axis rotation policy. This change is a good signal for risk assets, especially digital gold, as cryptocurrencies such as Bitcoin. It is expected that these assets will thrive if the Fed ends raising interest rates and begins implementing cuts.
It is noteworthy that the recent upward momentum of precious metals, especially gold, has begun in the context of geopolitical tensions in the Middle East. Investors seek gold as a hedge against economic uncertainty during this period.
Chairman Powell's comments have created a significant chain reaction, pushing many different assets to new heights. In particular, gold has reached an unprecedented peak, while the USD has fallen sharply, reflecting market expectations for an impending interest rate cut.
