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Gold shows growth amid Dollar strength

Wojciech R. Bolanowski, MD PhD

Chief AI Officer, retail and digital banking, payments and fintech in EU, GCC, SEA, enthusiast of cross-border banking

发布日期: 2024年10月24日

All-time high gold, again

In October gold maintains its steady growth with price exceeding $ 2,700 for last two weeks or so. On Wednesday the asset reached its all-time record and set it on 2,760 dollars per ounce. Despite the moderate drop last evening gold is still priced a hundred bucks more than a month ago. What’s more, today (October 24th, 2024) we see the growing of gold again and the steady trend is apparently back. By the? morning (7 a.m. UCT) the asset claimed back half of the previous drop reaching the level of $ 2,735 per ounce.

Gold price in USD over the last 24 hours – note the impressive rebound in the last twelve hours, recovering 50% of the earlier decline; data source: xe.com

Markets talk about dollar

Despite the impressive performance of gold and some other assets (including the flagship cryptocurrency – Bitcoin) markets are mainly talking about dollar. American currency has strengthened significantly since end of September and two factors seem to be accounted for this trend. Monetary wise, markets are now in favor of limited rate cuts in the future. Many analysts expect the next cut to be modest, likely 0.25 percentage point; they don’t expect further cuts to be bold, either. There is also the second, political factor. With US presidential election approaching the latest polls are more favorable for Donald Trump and markets react to it with increasing strength of greenback. Dollar has risen against majority of fiat currencies, including Euro and Japanese Yen, for last thirty days. According to reuters.com those two factors, economic and political, will be lifting US Dollar up for few more weeks, at least till November 5th, the day of the election.

Fiat currencies weakens, but Shekel is quite strong

Fiat currencies collectively lost against dollar in October. Euro is now worth 3% less than a month ago. Polish Z?oty failed by almost 5% during the same time. Among the monitored currencies Israeli Shekel performed the best. It lost only 0.2%. The gap between Z?oty and Shekel has widened again and is now around 1.5 cents per unit (ca. 6%). Typically, small, exotic currencies tend to lose more than Euro or Yen when US Dollar strengthens and we see this confirmed by the performance of Z?oty. Shekel, on the contrary, stays strong recently which make him the best fiat currency in the basket of monitored assets. In the long term, however, the Polish currency is the strongest of all three. Since the outbreak of the war in Ukraine (February 2022) Zloty has gained 0.6% while Euro and Shekel lost 4.7% and 14.8%, respectively. Gold and Bitcoin have been performing much better than currencies. Gold is now worth more than 40% comparing with February 2022 and Bitcoin has gained almost 80% for the last 32 months.

Gold, Euro, Bitcoin, Shekel and Z?oty price for last 32 months. The chart showing relative change of the average market price in USD; data source: xe.com

Alternative assets performance

Last month gold rose by 3.5% and Bitcoin by 5.2%. The latter has recovered from half year loss and climbed to the level comparable to last March height. It is very hard to estimate the further trend on Bitcoin whether it will continue growing or rather stays in the horizontal drift for longer. It is very likely that we have to wait for any significant change to November and the final clarification on the shape of the political leadership in the United States. Again, American politics is influencing investors decisions much more than prolonged and stalled wars in eastern Europe and Middle East.

Price of Bitcoin and gold (in USD) during last 32 months; data source: xe.com

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