BRICS Drives Gold Price to All-Time High as Nations Ditch US Dollar
The comments below are an edited and abridged synopsis of an article by Jaxon Gaines, Watcher Guru
The gold price has surged to a record high, largely driven by the efforts of the BRICS bloc. Key alliance members have been significant investors in the precious metal over the past year, with expectations that their new currency will be backed by gold. In 2024, China increased its gold investments, with other BRICS nations following suit in an initiative to shift away from the US dollar.
This rise in gold comes amid a continued decline in the US dollar, which has seen four consecutive weeks of depreciation. Gold has jumped by 2.5%, with spot gold trading at $2,487.66 per ounce, while US gold futures rose 1.4% to $2,526.40. Global buyers, particularly overseas, appear to be mirroring the actions of BRICS by favoring gold investments over the greenback.
Tai Wong, an independent metals trader based in New York, noted, “Gold surged to a fresh all-time high after two weeks of extremely choppy trading as bulls finally impose their will.” Wong also speculated that the $2,500 price threshold will likely break soon, as market attention shifts to the upcoming speech by Fed Chair Jerome Powell at Jackson Hole. This address is expected to provide more insight into the direction of interest rate cuts.
The ongoing gold rally is also linked to BRICS’ efforts to reduce reliance on the US dollar. There are reports that the alliance may back its new currency with gold, rather than local or foreign currencies like the dollar. The BRICS bloc aims to re-establish a gold standard and create a multipolar global trading system. The World Gold Council has highlighted BRICS as the largest buyer of gold since 2022, with the bloc steadily increasing its reserves.
Meanwhile, inflation in the US has begun to slow, signaling a potential turning point for the dollar, which has struggled to regain strength since the end of the pandemic. The rise of BRICS has further complicated the dollar’s recovery, as more countries express interest in joining the alliance. Many nations are now looking to gold as a hedge against the US dollar, accelerating the de-dollarization trend spearheaded by BRICS.
The Fall 2024 BRICS summit is expected to attract even more countries, further bolstering the bloc’s influence in global trade. As more nations shift to gold as a reserve asset, BRICS’ mission to reduce dependency on the dollar could reach its peak sooner than anticipated.
The weakening of the US dollar has raised concerns about a potential recession. Experts suggest that the odds of a recession are increasing, which could further erode the dollar’s value. This would likely strengthen BRICS’ position in the global economy, further increasing the demand for gold as a stable and valuable asset.
As the world watches these developments, gold remains a key player in the evolving financial landscape, driven in large part by the strategic moves of the BRICS nations.
