6 Geo-Political Events Shaping US Elections and Gold Prices in 2024

Gold prices remained close to a record high on Thursday amid speculation of a potential interest rate cut by the Federal Reserve in September. This surge in gold prices comes as investors brace for possible monetary easing measures following recent developments.

Following the Federal Reserve’s meeting on July 30-31, discussions around a potential interest rate cut emerged among officials, although the central bank opted to keep rates unchanged. Despite this, swap traders are now predicting a quarter-point rate decrease next month, with a 20 percent chance of a larger half-point reduction.

Analysts observed that gold prices saw gains on Wednesday, nearing record levels following the release of the July meeting minutes from the U.S. Federal Reserve. The minutes highlighted a strong inclination towards a rate cut in September, prompting a decline in the dollar to a seven-month low and a dip in U.S. 10-year bond yields to a two-week low. Investors are now eagerly awaiting Fed Chair Jerome Powell’s upcoming speech at the Jackson Hole symposium,” remarked Prathamesh Mallya, DVP- Research, Non-Agri Commodities and Currencies, Angel One.

As anticipation grows for Fed Chair Jerome Powell’s speech at the Jackson Hole symposium, coupled with a weaker dollar and lower bond yields, Mallya anticipates further upward movement in Gold prices.

Besides the U.S. Fed, geopolitical events hold significant sway over financial markets, including the gold market. The Gold Bullion Company’s experts highlighted the impact of various critical events on gold prices in a recent report.

Key Geopolitical Events Affecting Gold Prices

1. Tensions in the Middle East

Recent surges in gold prices during October 7th, amidst escalating violence in the Middle East, underline the role of geopolitical tensions in driving demand for gold as a safe-haven asset. As unresolved conflicts persist, the demand for gold is expected to rise, pushing prices higher.

The upcoming November 2024 US election is another event with potential repercussions on gold prices, given the broader economic and diplomatic policies that could emerge post-election. The uncertain global landscape, coupled with geopolitical tensions, is likely to drive gold demand.

The ongoing conflict between Ukraine and Russia, now in its third year, remains a source of economic instability. Any escalation in the conflict, such as increased sanctions or market disruptions, could prompt investors to turn to gold as a safe asset, leading to price increases.

Rising tensions between China and Taiwan, marked by China’s increased gold reserves, indicate the potential for a conflict that could have global economic implications. In such scenarios, investors might seek refuge in gold, driving prices upward.

BRICS nations’ focus on economic, social, and geopolitical issues at their upcoming October summit could challenge the dominance of the dollar, potentially impacting global gold prices by shifting to alternatives like gold and oil.

6. Climate-Related Disasters

Environmental disasters linked to climate change can disrupt gold supply chains, leading to price spikes due to constrained availability. This connection highlights the interplay between climate-related events and gold market dynamics.

Rick Kanda, Managing Director at The Gold Bullion Company, emphasizes the importance of understanding global events when investing in commodities like gold. Awareness of geopolitical developments is crucial as they can significantly impact market trends and commodity prices, necessitating thorough research before making investment decisions.