AXMIN Inc (TSXV: AXM)
AXMIN Inc. (TSXV:AXM) is a Canadian-based exploration and development company with a strong focus on central and West Africa.
Gold prices have increased for the third consecutive day, reaching a key resistance level of $2,650 per ounce, driven by heightened safe-haven demand due to escalating Russia-Ukraine tensions, along with short covering and bargain hunting. Spot gold rose 0.7% to $2,650.96 per ounce, while U.S. gold futures climbed 0.9% to $2,653.90.
Russian President Vladimir Putin’s approval of a new nuclear strategy that broadens the conditions for using nuclear weapons has intensified geopolitical tensions. Peter Grant, Vice President and Senior Metals Strategist at Chicago-based Zaner Metals, noted that this has clearly spurred safe-haven interest in the market. Additionally, the inverse correlation between gold and the dollar has resurfaced in recent weeks, with the dollar’s strength posing some resistance to gold prices.
Gold has faced pressure since Trump’s election victory. Last week, the U.S. dollar index hit a one-year high, and gold prices saw their largest weekly drop in three years.
Despite the significant pullback, gold remains one of 2024’s hottest commodities, with a year-to-date return of about 28%. The rally has been fueled by central bank demand, shifts in Federal Reserve policy, and geopolitical tensions. The ongoing rebound in gold prices has led more analysts to assert that the uptrend is not over. Goldman Sachs, for example, expects gold to reach $3,000 an ounce by the end of next year, while UBS forecasts it will hit $2,900.
However, it’s not just Goldman Sachs and UBS anticipating record highs in 2025.
Julia Khandoshko, CEO of European brokerage Mind Money, said in an interview that the current drop in gold prices is merely a correction, not a reason to revise forecasts. She believes it’s only a matter of time before gold returns to last month’s all-time high of $2,800 and anticipates it reaching $3,000 by 2025. She noted that the factors boosting gold, such as geopolitical turmoil, the strengthening role of the East, and global inflation, will not change due to U.S. election outcomes.
Meanwhile, markets are closely watching statements from Federal Reserve officials. Expectations for a rate cut in December have decreased significantly, from 82.5% a week ago to 55.5% now. ANZ noted in a report that if the Fed pauses rate cuts in December, it may temporarily dampen gold prices. However, the broader easing cycle, coupled with macroeconomic and geopolitical uncertainties and strong physical demand, will maintain positive sentiment for the gold market.
Khandoshko stated that Western investor demand, which had been on the sidelines, began to rise as the Fed started its easing cycle. From a broader cyclical perspective, gold’s recent pullback has provided investors an opportunity to enter the market. While the factors currently pressuring gold include Trump’s “America First” policies bolstering U.S. bond yields and the dollar, she does not believe the dollar’s strength will continue into 2025.
Standard Chartered analyst Suki Cooper also highlighted that heightened geopolitical risks, coupled with widespread market uncertainty and unknown risks since the pandemic, have renewed investor interest in gold as a safe haven. However, macro factors, including the dollar and rate cut expectations, might affect market direction in the short term.
