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Gold hits historical high: $2,800 per ounce

The price of gold has reached an unprecedented level — for the first time in history it exceeded $2,800 per ounce. The current price of the precious metal is $2794.

Such a rapid price increase exceeding 30% this year is attributed to several factors. First, central banks are actively buying gold, making it more in demand on the market. Secondly, during the period of geopolitical instability caused by conflicts in the Middle East and Ukraine, investors are increasingly turning to gold as a «safe haven.»

Also, the uncertainty caused by the upcoming presidential elections in the United States supports interest in gold as a reserve asset. Analysts are recording a strengthening market position, expecting not only a reduction in Fed rates, but also broader market and geopolitical uncertainty.

Global demand for gold reached a record high in the third quarter, exceeding $100 billion. According to the World Gold Council, sales volumes increased to 1,313 tons, due to active investment flows, including from wealthy individuals from Western countries.
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The European economy grew in the third quarter

In the third quarter, the eurozone economy showed unexpectedly strong growth, reaching 0.4%. France and Spain became the key drivers of this growth, and Germany, which was previously under threat of recession, increased GDP by 0.2%. In Italy, the production level remained at the level of the previous quarter.

Inflation in Spain accelerated slightly to 1.8%, remaining within the ECB's target range of 2%. Consumer prices in Germany rose by 2.4% y/y in October.

Germany still faces challenges such as loss of competitiveness due to high energy costs and a shortage of qualified personnel. Nevertheless, growth in the third quarter was supported by consumer and government spending.

The growth of the French economy is associated with the Olympic Games, as well as with increased government spending, despite the difficult financial situation. Although the increase in French GDP has brought some relief to the government, weak investment figures and a slowdown in consumer spending continue to negatively affect the budget.

Austria also showed growth of 0.3%, while Portugal and Lithuania have seen an acceleration in GDP growth.
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Oil soared amid Iran's threats

Tensions in the Middle East have brought the market's attention back to the escalation of hostilities, which has led to a sharp rise in oil prices. Reports of a possible Iranian attack on Israel from Iraq in the coming days forced investors to pay attention to geopolitical risks.

On Friday, Brent and WTI recorded significant growth, exceeding $74.80 and $70.2, respectively. At the beginning of the week, prices fell after a limited Israeli attack in response to rocket fire from Iran, but experts warned that the market «relaxed too quickly.»

Despite some encouraging signals, including the American proposal for a cease-fire in Lebanon and Israel's stated willingness to respond decisively, market participants continue to anxiously observe the growing tensions in the region.

The oil market will be under the close attention of investors in the near future, as a number of key events may significantly affect prices. Next week, the United States will hold presidential elections and a meeting of the highest legislative body in China. Also, the decision of OPEC+ to gradually resume production from December will have significant weight for the price trend.
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Bitcoin has broken the historical maximum of $81000

The bitcoin exchange rate exceeded $81,000 for the first time after Donald Trump's victory in the US presidential election. Traders expect a relaxation of cryptocurrency regulation by Trump, who has previously expressed his support for them.

On Monday, bitcoin rose 2.8% to $81,241. Over the past week, the growth was 14%, over 25% in a month, and over 100% in a year.

Republicans, in addition to Trump's victory, are approaching full control of Congress. This will allow the new administration to implement policies that will support cryptocurrencies.

Experts suggest that the new administration will bring positive changes, in particular, in the work of the Securities and Exchange Commission. These changes will lead to a softer regulatory stance on digital assets.

They also note that the increased demand for bitcoin is due to a combination of favorable factors: reduced regulatory risks, improved financial conditions and optimistic macroeconomic prospects for the United States.
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Economic expectations in Germany are falling amid the US elections

November brought negative news for investor and analyst sentiment in both Germany and the eurozone. The data from the economic expectations index clearly show a decline in optimism.

The German index fell to a modest 7.4 points from 13.1 points in October. This sharp decline, significantly exceeding the projected 13 points, is primarily due to unstable political events both inside and outside Germany.

Donald Trump's victory in the US presidential election has caused a noticeable negative impact on economic expectations. While the economic recovery is growing in the United States, the situation in the eurozone and China, on the contrary, is deteriorating.

In parallel with the drop in the expectations index, the assessment of the current economic situation also decreased to -91.4 points, reaching the lowest level since May 2020.

The situation in the eurozone is not much better: the index of economic expectations fell to 12.5 points from 20.1 points, not meeting forecasts for growth to 20.5 points. The assessment of the current economic situation in the eurozone also decreased by 3 points, reaching -43.8.
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Why the US Dollar Will Continue to Strengthen

Yesterday, the euro and pound quickly lost ground against the US dollar after Federal Reserve Chair Jerome Powell confirmed traders' concerns by stating that recent data provides the central bank with room to lower interest rates cautiously.

"The economy is not signaling any need for us to rush into rate cuts," Powell said on Thursday in Dallas. "The current state of the economy allows us to approach our decisions cautiously."

The Fed began lowering borrowing costs in September with an aggressive half-point cut, followed by a quarter-point reduction last week. The Fed indicated readiness to continue lowering rates if inflation remains subdued. However, Powell's remarks align with several colleagues who advocate for a more gradual approach to future rate cuts.

Powell's comments have tempered market expectations for a December rate cut. Policy-sensitive two-year Treasury yields rose by eight basis points to 4.36%, while swap traders reduced the odds of a December rate cut to less than 55%, down from about 88% the day before.

Powell also addressed recent data, noting that inflation remains on a bumpy path: "The economy shows no urgency for rate cuts, as inflation demonstrates some signs of picking up," Powell stated on Thursday. He added that uncertainty about the neutral rate—where policy neither stimulates nor restrains growth—warrants caution. This week, several Fed officials highlighted the importance of defining the new neutral rate as a key factor in shaping future policy.

"We should be cautious in this environment," Powell said. "As the central bank approaches the plausible range of neutral levels, it may be the case that we slow the pace of what we're doing."

As I noted above, recent data showed that headline inflation in October remained unchanged, while the core Consumer Price Index (CPI), excluding food and energy costs, rose 0.3% for the third consecutive month. "Inflation is approaching our long-term 2% target, but it hasn't reached it yet," Powell said. "We are committed to finishing the job. With labor-market conditions in rough balance and inflation expectations well anchored. I expect inflation to continue its descent toward 2%, albeit on a bumpy trajectory."

Powell refrained from commenting on the likelihood of a December cut.

Monetary policy could face new headwinds following President-elect Donald Trump's potential tax cuts, immigration restrictions, and tariffs. Political uncertainty may further reinforce the Fed's cautious stance on rate cuts.

The US dollar has gained significant strength over the past two weeks and now dominates the forex market.

As for the current technical picture of EUR/USD, buyers need to reclaim the 1.0580 level to target a test of 1.0615. A move beyond this level could lead to 1.0655, although such progress will require support from major market players. The most distant target is 1.0690. If the trading instrument declines in 1.0540, I expect major buyers to take action; failing that, it would be good to wait for the 1.0495 low to be updated or to open long positions from 1.0460.

As for the current technical picture of GBP/USD, pound buyers need to break through the nearest resistance at 1.2680 to aim for 1.2725, above which breaking through will be quite problematic. The furthest target will be 1.2760, followed by a potential sharp rally to 1.2796. Bears will aim to regain control of the 1.2630 area if the pair declines. A breakdown here would deal a significant blow to bullish positions, pushing GBP/USD toward 1.2585, with a further target at 1.2550.
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Electricity prices in Germany have soared to record levels

In Germany, electricity prices have peaked in the last 12 months. The driver of growth was the upcoming cold snap and a decrease in the production of renewable energy sources.

Futures for next month in Europe's largest economy rose 4.4%, reaching their highest value since October last year.

Despite a relatively mild autumn, a colder winter is expected in most of the continent, which will lead to increased demand for electricity and natural gas. Weather forecasts point to lower temperatures in the coming days, especially in Berlin, where temperatures are expected to drop to 1°C.

A decrease in the projected wind energy production in Germany for most of this week also has a negative impact on the market.

The cold weather also encourages utilities to consume more natural gas from storage facilities, which contributes to higher fuel prices. Uncertainty about supplies from Russia adds even more risks to the market.

As a result, the price of electricity in Germany for the next month increased to €108 per MWh, and in France – to €101.5.
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ECB: AI bubble threatens financial stability

The European Central Bank (ECB) has expressed alarm about a possible bubble in the stock market related to artificial intelligence (AI).

In its semi-annual financial stability review, the ECB noted that the stock market, especially in the United States, is increasingly dependent on several companies considered leaders in the field of AI. This concentration raises concerns about the possibility of an AI asset bubble. Investors demand a low premium for owning stocks and bonds, and funds have reduced their cash reserves, which can cause a shortage of cash and forced asset sales.

The central bank warned that if investors' expectations for the revenues of these companies are not met, then a sudden drop in asset prices may occur, which threatens adverse global consequences.

The ECB expressed concern about the low liquidity of assets and the reduction of funds' cash reserves, which could lead to forced asset sales and a decrease in their value. Among other risks, the ECB noted the vulnerability of the eurozone to trade fragmentation and possible negative consequences from the introduction of tariffs, as well as an increase in borrowing by eurozone countries at higher interest rates.
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Bitcoin has reached a historic high, exceeding the $97,000 mark

Investors continue to actively invest in cryptocurrency, expecting favorable policy changes under the new president. This was reflected in the bitcoin exchange rate, which increased by almost 6% and reached $97,458.

Shares of cryptocurrency-related companies are also showing growth. MicroStrategy, one of the largest companies investing in bitcoin, rose 3% after a previous increase of more than 10%.

The rise in the price of BTC is due to hopes for a more loyal attitude towards cryptocurrencies from the new government. It is assumed that Trump may introduce more flexible regulation and even consider the possibility of creating a national strategic reserve of bitcoin. Experts predict that the price of bitcoin could reach $100,000 this year and double by the end of 2025.

Analysts also note that the growth of the bitcoin exchange rate is associated with improved liquidity, increased institutional interest and a more favorable regulatory environment. In 2024, bitcoin has already grown by more than 127%.
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Kuwait will spend more than $30 billion to increase oil production

Kuwait Petroleum Corp. (KPC) intends to invest about 10 billion Kuwaiti dinars ($33 billion) over five years to increase oil production. According to CEO Sheikh Nawaf Al-Sabah, the company plans not only to maintain the current capacity, but also to significantly increase it in accordance with strategic goals.

According to Nawaf, Kuwait's forecast for stable oil demand until the middle of the century coincides with the expectations of such major market players as TotalEnergies SE and Vitol Group. However, the International Energy Agency (IEA) suggests that global oil use will peak by 2030 due to the shift to electric vehicles and renewable energy sources.

KPC's investments are part of a large-scale program worth 20 billion dinars, launched in April and covering the entire spectrum of the oil industry – from production to petrochemicals. In 2024, the company intends to reach a production capacity of 3.2 million barrels per day, and by 2035 to increase this figure to 4 million barrels.

Today, Kuwait is one of the ten largest oil producers, producing about 2.5 million barrels daily, and continues to strengthen its position in the global energy sector.
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