Gold made a striking ascent this morning by $35, landing at $1990, whereas silver’s shimmer grew by $0.75, touching $23.58.
On the technical front, gold enthusiasts eye the coveted $2,000.00 milestone for December futures, while the cautious ones hedge their bets below $1,875.00. Silver sees a good bit of resistance at the $23.89 price point, while its enthusiasts are looking to breach the $24.00 in order to see it break out higher.
In the wake of intensifying Middle East conflicts, particularly the heart-wrenching incident earlier this week at a Gaza hospital with over 500 casualties, gold and silver are shining brighter than ever. Over night, we saw reports indicating that ammunition initially sent to Ukraine was being diverted to Israel- another indication that the events are still ramping up. Since the beginning of the month, gold has seen a rise to 3 month highs, with silver tracking higher as well. These tumultuous geopolitical events are ushering traders and investors toward the comforting embrace of safe-haven assets.
For those who are new to precious metals, war and geopolitical tensions often lead to increased uncertainty and volatility in global markets. In such scenarios, investors seek stability and safety, which is why they often turn to “safe-haven” assets. Gold and silver are considered such assets for several reasons:
- Historical Value: Gold and silver have been valued as wealth and a medium of exchange for thousands of years. They have retained their value across civilizations, wars, and economic crises.
- Tangible Assets: Unlike stocks or bonds, gold and silver are tangible assets. They don’t rely on a third party’s ability or promise to pay, making them more reliable during uncertain times.
- Low Correlation with Other Assets: Gold, in particular, often moves independently of stock markets and can even perform well when stocks are down. This makes it an attractive option for diversifying portfolios during times of conflict.
- Inflation Hedge: Wars and conflicts can disrupt trade and economic activity, potentially leading to inflation or even hyperinflation in extreme cases. Gold and silver are often seen as hedges against inflation because, historically, their value has often risen when the purchasing power of fiat currencies declines.
- Weakened Confidence in Fiat Currencies: Wars can undermine confidence in governments and their currencies. If investors believe that a currency will weaken due to war or geopolitical tensions, they might turn to gold and silver as more stable stores of value.
- Increased Physical Demand: In times of geopolitical crisis, there can be an increased demand for physical gold and silver. This could be due to individuals seeking to protect their wealth or central banks aiming to bolster national reserves.
There is no major economic data being released today.
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