Jay Kaeppel, Senior Research Analyst at SentimentTrader, stated that although gold is currently showing multiple favorable trend signals, the price of gold may experience a parabolic surge similar to the late 1970s to early 1980s. In short, gold may rise to unsustainable highs, eventually forming a foam and bursting with it.

Jay stressed: "(Gold) rose to an unsustainable high, eventually forming a foam and then burst."

Rick Bensignator of Bensignator Investment Strategies also holds a similar view. He recently sold about 50% of his gold holdings at a price of $2700 per ounce and reminded investors not to be misled by media speculation about gold.

According to Ole Hansen, head of commodity strategy at Saxo Bank, the recent rise in gold has been mainly driven by factors such as fiscal instability, rising demand for safe haven, central banks increasing their gold reserves, and increased uncertainty surrounding the recent US presidential election.

The uncertainty surrounding the November presidential election in the United States is intensifying

The United States will hold a presidential election on November 5th, and the unpredictable election situation in swing states has increased market instability, prompting investors to turn to gold as a safe haven asset.

Hansen stated that political uncertainty in the United States is the main reason driving the increase in safe haven demand.

In addition, Fawad Razaqzada, a market analyst at Forex.com, also stated that the uncertainty of the US election has supported gold prices in the short term, and gold remains a classic hedge against market volatility.

War avoidance

From October 2023, Israel will have conflicts with Hamas, Iraq, Lebanon and other neighboring organizations or countries in the Middle East, and the Russia-Ukraine conflict that lasted for two years has not ended. Against the backdrop of regional wars escalating towards internationalization, the safe haven value of gold is gradually increasing.

Expectations of Federal Reserve interest rate cuts

The market's expectation of a Fed rate cut has driven the rise of gold. Currently, according to CME's Fed Watch tool, the market predicts a 99% chance of a 25 basis point rate cut in November and a 1% chance of no rate cut. Due to the fact that gold itself does not generate interest, interest rate cuts will reduce the opportunity cost of holding gold, thereby increasing its attractiveness to investors.

Despite the recent strengthening of the US dollar and the increase in long-term bond yields, which theoretically should weaken the attractiveness of non yielding assets such as gold, the price of gold continues to rise.

Regarding this, Jeff Jacobson, an analyst at 22V Research, stated that this indicates a strong and powerful bullish sentiment towards gold in the market.

Due to the stable upward trend of gold, it indicates that there may still be enough room for further growth.

However, Razaqzada stated, "If yields and the US dollar maintain their current momentum, the short-term outlook for gold may be under pressure, but there are currently no signs of that

The central bank increases its gold reserves

Global central banks have significantly increased their holdings of gold, especially in emerging markets that are looking to reduce their dependence on the US dollar due to geopolitical tensions. This strong demand has provided important support for gold prices this year.