'High risk, high reward', when will the gold price peak and decline?

Lurking on the cusp of history

Gold prices have fluctuated wildly recently, skyrocketing and setting an all-time high of $2,685 per ounce on September 26, then plummeting to below $2,600 before returning to hover around its historic peak.

The USD is strengthening again, restraining the rise of gold. However, many investors are betting on the possibility of "high risk, high reward" with gold when geopolitical tensions escalate around the world, which can push the precious metal to new peaks at any time.

As of the evening of October 17 (Vietnam time), the spot gold price was at 2,685 USD/ounce (equivalent to 82.1 million VND/tael).

In Vietnam, SJC gold bars reached 84-86 million VND/tael (buy-sell), the price of gold rings continuously reached new peaks. Doji's brand reached 84.75 million VND/tael in the late afternoon of October 17.

A turning point for the gold market may be ahead as the US approaches the presidential election on November 5. However, the direction of gold prices may depend on who will occupy the White House, Donald Trump or Kamala Harris, and what the US foreign and domestic policies will be.

Around the world, three weeks before the US election, tensions are escalating everywhere, from Ukraine, the Middle East to the Korean peninsula. Everything is very unpredictable.

Tensions in the Middle East escalated as Israel said on October 17 that it had targeted and was preparing to retaliate against Iran in response to Tehran’s ballistic missile attack earlier this month. Meanwhile, Ukraine is under great pressure as Russia advances at an unprecedented pace on the Donbass front in southeastern Ukraine. The situation on the Korean peninsula is heating up as both sides threaten each other and are ready to open fire.

US election turning point and the possibility of gold prices entering a recession?

Despite the strong rebound of the US dollar, gold prices have continued to rise. The DXY index (which measures the greenback’s performance against six major currencies) has now jumped to 103.6 points, compared to 100.7 points in mid-September.

In the medium and long term, the USD is on a downward trend following the signal of the US Federal Reserve (Fed) to reduce interest rates from the current 4.75-5%/year to about 3%/year in 2026. However, in the short term, the USD may not decrease further because the Fed is delaying and money is taking refuge in the greenback.

Most recent forecasts suggest that gold will continue to rise in price, at least until mid-2025, with the possibility of a weakening US dollar, with prices possibly reaching $2,700 by the end of this year and $3,000 thereafter.

In fact, according to Saudi Arabia's Al-Hadath news agency, the US seems to have no intention of resolving the situation in the Middle East before the election.

However, there are also many warnings that gold could quickly reverse and fall into a recession due to profit-taking pressure and also because the USD is unlikely to fall deeply when it is still considered the "soft power" of the United States.

Moreover, geopolitical tensions may ease after the US election. The Republican candidate has repeatedly said he plans to end the conflict in Ukraine and has also said that Israel must quickly end its conflict with Hamas in the Gaza Strip.

But for some experts, the gold rally is not over yet. With the world pumping money for many years, gold will continue to rise and reach $4,800 by 2030.