( New York, 22nd July 2020 ) The price of gold soared to its highest level in 9 years due to the sell-off of the U.S. dollar and the market expects greater stimulus to help recover economies hit by the pandemic.
Spot gold rose 1.5% to US$1,842.52 per ounce, hitting the highest level since September 2011, and is expected to record the largest one-day increase since early May. The settlement price of US gold futures rose 1.5% to US$1843.9 per ounce.
Melek, head of commodity strategy at TD Securities, said, “The dollar is falling because the world looks slightly better. Yield curve and interest rates have fallen across the board, which is once again another factor in helping gold prices.”
According to a "Reuters" survey, gold prices will continue to rise to record highs in the next 18 months, as the new crown epidemic crisis has prompted investors to hoard gold to hedge possible turbulence in the broader market.
However, interviewees said that sluggish jewellery sales in Asia and prospects for economic recovery will hinder further growth in gold prices. Spot gold is one of the best performing assets this year. Its price has risen by nearly 20%, and it has exceeded US$1,800 per ounce for the first time since 2011.
Factors that have contributed to the surge in gold prices include low interest rates and the perception that central bank stimulus measures and economic turmoil may devalue other assets.
The median estimate of the 42 analysts and traders interviewed is that the average gold price in 2020 and 2021 will be US$1713 and US$1,800 per ounce, respectively, which is much higher than the estimated US$1639 and 1,655 per ounce in a similar survey in April. Dollar.
StoneX analyst O'Connell said, “The greater the uncertainty in the control of the epidemic and the global economy, the more bullish the price of gold will be. In 2021, the price of gold may reach a record high of more than $2,000.” Although Western investors have been buying, demand in Asia has fallen sharply, and some have even sold gold. Independent analyst Norman said that the biggest threat to gold prices may be the continued downturn in the Asian market and the increase in gold scrap.
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