With a growing apprehension in the global economy and ongoing conflicts across different parts of the world, the last few weeks have witnessed a dramatic increase in the price of existing records in the gold and silver market.
This increase in value is due to the increasing presence of tariffs between the United States and the European Union, which is leading to fears of a potential global trade war which will impact world economic standings.
In the history of gold trading, reaching prices of more than $4,750 an ounce, is an extraordinary accomplishment. The reasons given for the increase in the price of gold is due to the number of different variables active in the market, such as exchange rates, inflation, and, most importantly, the buying trend by both institutional and regular investors attempting to insulate their economic strategies during the period of rapidly increasing inflation.
Historically, the value of gold is highly dependent on the presence of global conflicts as the value of gold is associated with the presence of war and the period of inflation which is tied to war.’
Silver’s price has also been increasing and is now greater than $95 per ounce which is up 31% year-to-date (YTD). While investing in silver can be seen as a hedge against economic uncertainty in the same way investing in gold is, silver is also an industrial metal used in many manufacturing applications such as the construction of electronic devices, renewable energy products, and in the production of electric vehicles (EVs). This increased demand is the reason why, with the current economic conditions, many analysts believe silver’s price will rise to $100 per ounce.
This year has produced the other end of the spectrum in terms of economic outcomes for the crypto currency markets unlike the precious metal markets. Bitcoin has dropped to below $93,000. plus and Ethereum has also declined to below $3,100.
With this decline in price, the crypto markets as a whole have also seen a drop of 2.27% in the last 2 hours which is an indicator of the current markets risk appetite.
With the same macro economic conditions resulting in price reductions in the crypto currency markets of Solana (SOL), Dogecoin (DOGE), and Cardano (ADA), they have all seen price drops this year as well.
Caution is also likely because of U.S. President Donald Trump and now what many believe is also the proposing of a 10% tax on some products. These policies have caused new fears of an economic slowdown and fears of new supply chain disruptions. Because of this, the economic sentiment has caused the price of riskier investments such as cryptocurrencies and stocks to drop.
Nonetheless, some signs may suggest ongoing efforts to resolve the ongoing diplomatic crisis. At the World Economic Forum in Davos, Trump confirmed talks on trade he described as positive. He also mentioned talks with NATO Secretary General Mark Rutte. These new trade talks are said to be focused on tariffs and the overall trade relations between the U.S. and the EU, which could provide a path to reduce some tensions.
Market analysts also predict strong performance of precious metals in January. Gold is expected to be in the \$4,800 range because of continued uncertainty in the world and heavy buying by central banks. Silver looks great too. If there is continued demand from industry and investment, it could surpass \$100.
It seems the global turmoil will positively affect the precious metals market. However, the same cannot be said for the crypto market. If the risk appetite remains low, and the global economic crisis doesn’t resolve, crypto assets like Bitcoin and Ethereum are also likely to be negatively impacted, as investors will be seeking stability rather than speculative growth.
