Persisting Active Gold Market Surge

The demand for gold has been on the rise, with the precious metal reaching record highs in both US dollars and euros. This surge in demand can be attributed to a combination of economic and geopolitical factors.

In August, the number of new jobs created in the US fell significantly short of expectations, and the unemployment rate reached its highest level since 2021. These economic indicators have contributed to a weaker economic environment, driving investors to seek safe investment options. Gold, being a traditional safe haven, has been in high demand during times of uncertainty.

The current economic and geopolitical climate has also played a significant role in the strong demand for gold. Geopolitical risks, such as the uncertainty surrounding aggressive US trade policies and the ongoing Russian invasion of Ukraine, have been driving demand for gold as a safe investment option.

Expert Zumpfe explains the strong demand for gold as a "safe haven." He further notes that the demand for gold can be seen as a hedge against economic and geopolitical risks. The expectation of falling interest rates in the US is the strongest price driver for gold, as it makes gold a more attractive non-yielding asset.

Central banks worldwide, including the Federal Reserve, have also been significant gold buyers to protect against currency depreciation and geopolitical risks, further supporting demand. Investor flight to safety due to economic uncertainties and speculation on large Fed rate cuts also contribute to the price surge.

In fact, gold prices have gained about five percent in value since the beginning of the month, reaching a record high of $3,617.17 per ounce on Monday at London's exchange. This marks an increase of around $1,000 since the start of the year. In euros, gold prices also hit a record high of €3,082.81.

The current high gold price development in the USA is expected to continue into September 2023, mainly driven by weak US labor market data strengthening expectations of interest rate cuts by the Federal Reserve. This, in turn, increases gold's attractiveness as a non-yielding safe haven asset.

It's important to note that the demand for gold is not limited to specific economic indicators but also includes geopolitical factors. The demand for gold may be indicative of investor uncertainty, with the investor flight reflex being strengthened due to the combination of geopolitical risks.

As the economic and geopolitical landscape continues to evolve, it will be interesting to see how gold prices respond and whether this trend of increased demand for gold as a safe haven continues.