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Gold prices likely to stay strong, expert says

Volatility expected in global oil prices

The weakness in the US dollar is expected to continue, which bodes well for gold prices, analysts say.

The recently announced Chinese stimulus package is another reason for potential gold spikes in the long term. “China is the biggest consumer of gold in the world and this makes any improvement in the second-largest economy in the world should be positively reflected in gold price action,” said Mohamed Hashad, chief market strategist, Noor Capital.

In the bigger picture, tensions in the Middle East and the Fed’s monetary policy approach – quantitative easing – are expected to provide a strong push to gold in the uptrend as rate cuts started by FOMC in the September meeting suggest more weakness for the greenback. “On the other hand, if the “soft landing” scenario persists, as reflected in US jobs data for September, we may see some dollar strength,” Hashad said.

Meanwhile, oil prices have been on a wild ride in recent weeks, driven by a perfect storm of geopolitical tensions and natural disasters. The escalating conflict between Israel and Iran, coupled with the devastating impact of Hurricane Milton on US fuel supplies, has sent crude oil prices soaring.

“The Middle East, a region that accounts for a significant portion of global oil production, is once again a major source of market volatility. The ongoing war between Israel and Hamas, combined with the threat of a wider confrontation with Iran, has raised concerns about potential disruptions to oil supplies. Investors are closely monitoring the situation, as any escalation could lead to significant price increases,” Hashad said.

“The potential targets of Iranian retaliation include Saudi Arabian oil facilities, which are among the largest in the world. Any attack on these facilities could significantly reduce global oil supply and send prices skyrocketing. Additionally, the Strait of Hormuz, a narrow waterway through which a significant portion of global oil trade passes, could become a target for Iranian attacks. A closure of the Strait could have a catastrophic impact on the global economy,” he added.

On the other hand, Hurricane Milton, which made landfall in Florida, has caused widespread damage and disrupted fuel distribution. “The impact of Hurricane Milton is likely to be felt for weeks to come, as the region recovers from the storm’s devastation. The damage to refineries, pipelines, and other energy infrastructure could lead to supply constraints and further price increases” Hashad said.

In addition to these geopolitical and natural factors, economic indicators from the US and China are also influencing oil prices. “The US Federal Reserve’s potential interest rate cuts and China’s efforts to stimulate its private sector could boost economic activity and, consequently, fuel consumption,” Hashad said.

“Given the potential consequences of both the Middle East conflict and Hurricane Milton, it is clear that the global energy market is facing a period of significant uncertainty. The future direction of oil prices will depend on how these events unfold and how the world responds to them,” Hashad said.