Gold Crosses the $2,500 Mark: Can it still Surprise after this Historic Record?

As financial markets wobble under the weight of economic uncertainties and geopolitical tensions, gold, this millennial metal, continues to assert itself as the ultimate refuge. Recently propelled to a historic high above $2,500 an ounce, gold continues to capture investors’ attention. But could this meteoric rise continue, or even amplify, by the end of the year?

A new high for gold

Last week, gold reached a crucial milestone by hitting a new historic high of $2,509 an ounce. This threshold, long anticipated by analysts, was surpassed in a context where global markets are dominated by uncertainty. The release of disappointing economic statistics in the U.S., notably in the housing sector, triggered a rush towards the precious metal, seen as an essential safe haven in turbulent times. Faced with bleak economic prospects and persistent inflation, investors flocked to gold, reinforcing its status as the ultimate safety asset.

This new surge of the yellow metal can only be fully understood by considering the current geopolitical climate. Increasing tensions in the Middle East, exacerbated by the Israeli-Palestinian conflict and the war in Ukraine, have added another layer of uncertainty. According to Quasar Elizundia, strategist at Pepperstone, gold could target $2,700 an ounce in the medium term. A forecast that reflects increased confidence in the metal’s upward potential, supported by strong fundamentals and macroeconomic scenarios that play in its favor.

Towards new heights? Factors to watch

Indeed, the euphoria surrounding gold might not end at this recent historic peak. Looking at the dynamics at play, several factors suggest that gold could reach new highs by the end of the year. Growing expectations of monetary easing by the U.S. Federal Reserve, in response to signs of economic slowdown, are a major lever for a new price increase. The prospect of lower interest rates could weaken the dollar while making gold, a non-yielding asset, more attractive to investors seeking safety in an uncertain economic environment.

Beyond economic factors, the geopolitical climate remains a key element to watch. Tensions in the Middle East, notably around Gaza, as well as the intensification of the conflict in Ukraine, continue to weigh heavily on global markets. The risk of an escalation of these conflicts, with potential repercussions on the global economy, could further boost the demand for gold. Investors, already shaken by instability, might increasingly turn to the precious metal, further driving up its price. However, this bullish outlook is not without risks. A calming of tensions or a more robust-than-expected economic recovery could hinder this dynamic.