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Gold prices hit an all-time high, looking for more gains

The gold market started the week hitting a historical record against the US dollar. The yellow metal made its memorable move on Sunday, during the Asian trading session. 

Spot gold exceeded $1,920 and then August futures followed the move soon. August gold traded at $1,922.70 an ounce. This was more than a 1% increase on the day. 

Marc Chandler, a chief market strategist at Bannockburn Global Forex, states that the precious metal prices could beat $2,000 an ounce during the current rally. It’s hard to talk about resistance in prices never seen before. However, considering interest rates and the turn in the dollar cycle, $2,500 might not seem unreasonable. 

The global economy has been under pressure during the coronavirus pandemic. It has been supporting gold’s rally. In the last few months, the precious metal has seen a notable bullish momentum.

Analysts think that rising geopolitical tensions between the US and China is promoting the rally further. 

ASI’s Steven Dunn, the global head of ETFs, stated that the yellow metal’s surge above a level of $1,900 has been powerful. However, it was expected. Tensions between the two biggest global economies fueled the rise of gold. The trend does not seem to disappear in the near term. Investors continue to face uncertainty and this only will increase the appeal of haven assets like gold, Dunn said. 

 

Devaluation of the US dollar is another supportive factor for gold

Afshin Nabavi, the head of trading with MKS (Switzerland) SA, affirmed that the break above $1,900 an ounce indicates that the record highs are just a matter of time. The global uncertainty is going to drive the yellow metal’s prices higher. 

Because of the coronavirus pandemic, central banks around the world have executed aggressive fiscal policy stimulus measures. They pumped trillions of dollars to stabilize financial markets. This resulted in a significant decrease in bond yields that helps gold make more profits. 

Analysts at Capital Economics believe that real yields are expected to remain low for some period. This allows gold prices to remain high for a certain period into the future.  

Analysts say that the remaining weakness in the US dollar is another supportive factor for the yellow metal’s prices. 

Daniel Pavilonis, a senior commodities broker with RJO Futures, stated that gold keeps looking attractive. The US has printed so much money, with such a risk on the table, and it is challenging the US dollar rally from the current levels. 

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