Gold prices fell today by 1.2% to $2,738.54 per ounce, a significant decline that comes amid a state of anticipation and panic in global markets. This decline is interesting given the factors surrounding the global economy and current events, which cast a shadow over market movement.
- The impact of the Fear Index:
The Fear Index (VIX) witnessed an unprecedented rise, reflecting a state of extreme anxiety in the markets.
The likely reason: Unclear expectations about the Federal Reserve’s decisions on interest rates.
The rise in the panic index often boosts demand for gold, but today’s moves indicate that other factors are in control.
- Chinese technological innovation and its impact:
China launched its new model of artificial intelligence that competes with “GPT”, which created tensions in the technical and geopolitical markets.
The impact on gold: This innovation strengthened the Chinese yuan, which led to pressure on precious metals such as gold.
Uncertainty over the impact of artificial intelligence on the global economy contributed to a major sell-off in gold today.
- The first Fed meeting in 2025:
With just a few hours left until the Fed meeting, markets are cautiously anticipating:
Investor expectations: There are speculations of a 25 basis point interest rate hike.
The impact on gold: Higher interest rates make bonds more attractive than gold, putting downward pressure on prices.
- Future trends:
In the event of a rate hike: Pressure on gold is expected to continue in the short term.
In the event of a fixed rate: Gold may reverse course and head upward due to global uncertainty.
Conclusion:
Despite the current decline, gold still retains its appeal as a long-term safe haven, especially in light of geopolitical tensions and accelerating technological innovations. The Fed’s decisions in the coming hours will determine the market’s course, making the coming days crucial for the direction of gold prices.
Advice for investors:
Hedging: It is advisable to keep a mix of gold and other assets to ensure the stability of the investment portfolio.
Monitoring the news: Following the Fed’s decisions and technical developments, especially those related to China, will help in making informed decisions.