Gold prices have reached a new record above $3000 per ounce. It looks like many experts believe that it can skyrocket to even higher prices while some believe that the figure can hit $4,000 soon. But why is gold rising so quickly? There are three key reasons: the Bitcoin rally, Donald Trump’s trade wars, and investor worries about a downturn in the economy.
Gold and Bitcoin: A Surprising Connection
The most popular cryptocurrency, Bitcoin, has also been on a strong upward trend. Bitcoin has been called “digital gold” by some investors, a safe place to put money when the world around it is turning uncertain. However, others still trust traditional gold more. When the price of Bitcoin rises, some investors take their profits, leave the Bitcoin and buy gold which also thus propels the price of gold even more.
As such, central banks, big investors keep buying gold to preserve wealth. The other reason why gold is surging is this strong demand.
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Trump’s Trade Policies and Their Impact
Global trade tensions are another reason for gold’s rise. Donald Trump, a former U.S. president, was also known for his hard trade policies with China and other countries, often through tariffs (taxes on imports). However, if Trump is successful with his next election bids, many fear his trade wars might return. All of this uncertainty arouses the nerves of investors who as a result tend to buy more gold because gold is viewed as a “safe-haven” asset.
Trade wars make the stock market struggle and can drop the value of money. Nevertheless, gold maintains its purchasing power, so it’s a fairly good thing for those who want to counter their savings.
Economic Fears and the Future of Gold
Gold is also being pushed higher from fears of the economy, as well as other things aside from Bitcoin and trade tensions. There is still a big problem of inflation (rising prices of goods and services). It is something the central banks, like the U.S. Federal Reserve, are attempting to control through adjusting interest rates. However, this doesn’t always work as perfectly as it does in the example above.
More investors will view gold as a safe investment if inflation holds up or the economy sours. If these problems continue there are some who think that gold could go to $4,000 per ounce.
What’s Next for Gold?
That is a task that is not easy to predict the future of gold prices. When Bitcoin climbs more, when Trump’s trade policy is reinstated, and when the economy fails to strengthen, the gold will climb higher. If inflation returns to normal and the stock market improves, however, gold prices could slow.
But for now, gold is still a popular choice for those who want to protect their money in uncertain times. Whichever price range it closes at $4,000 or above, the little run up for Gold shows how investors globally are watching the events and taking steps to secure their wealth accordingly.
Also read: Fed Chair Powell Labels Bitcoin as ‘Digital Gold’ While Reinforcing Dollar’s Dominance
