Gold Plummets as US Small Caps Spike to Record High

Gold prices declined on Nov. 25 following reports of a potential cease-fire in the conflict between Israel and the Hezbollah terrorist group, while stock markets experienced record gains.
The yellow metal has so far been buoyed by safe-haven demand triggered by tensions in the region.
“The commodity can play an important role in building resilient portfolios. We expect that gold prices will find continued support from central banks, particularly in emerging markets, which have been buying 1,500 tons more gold per year than their pace before Russia invaded Ukraine,” the report states.
JP Morgan said that China’s central bank only has 5 percent of its reserves in gold compared to the Federal Reserve at 73 percent.
The investment bank also noted that the U.S. dollar is “structurally overvalued.” As such, investors could see gold as a way to diversify currency portfolios, which would support gold prices.
Gold exchange-traded funds also registered the first positive quarter in quarter three this year since the first quarter of 2022. Louise Street, senior markets analyst at the WGC, said she expects the investment flows in gold to continue.
“On the other hand, we’ve seen over 30 record price highs in 2024, and that environment will continue to be challenging for consumers. However, the prospect of economic growth is another factor we will be watching that could tip the scales,” she said.