Gold futures posted a record deal on Friday, along with their strongest weekly performance since early April, with calls to the never-before-seen level of $ 2,000 an ounce for the precious metal to come stronger than ever.
“The gold and silver bulls will face a real challenge in the next two weeks,” Chintan Karnani, chief market analyst at Insignia Consultants, said in a note on Friday. But if tensions between China and the United States escalate, and the United States sees a sharp daily rise in COVID-19 cases, “then gold and silver will only increase.”
He believes that the price corrections, if any, will be “slight”. The $ 2,000 mark for gold will “break very easily.”
GC00 Gold August,
GCQ20,
It rose $ 7.50, or 0.4%, to hit $ 1,897.50 an ounce on Comex Friday, after trading as high as $ 1,904.60. For the week, prices rose 4.8%, the largest weekly percentage increase since the week ending April 9.
The contract broke the most active contract settlement record of $ 1,891.90 since August 22, 2011, according to records dating back to November 1984, according to Dow Jones Market Data. The record busiest intraday level remains at $ 1,923.70 an ounce since September 6, 2011.
The July gold contract of the previous month GCN20,
trading at a significantly lower volume, it recorded a record for a second consecutive session. It settled at $ 1,897.30 on Friday, up to $ 8.20, or 0.4%, for the session. That’s a record for first-month contracts, based on data dating back to 1975.
Read: Gold hits a near record as tensions rise between the United States and China
“There are many push and pull factors in the context” of the gold recovery, said Barani Krishnan, senior analyst for commodities at Investing.com. “You have expectations of encouragement around the world after the [European Union] $ 750 billion coronavirus relief plan, even as Congress comes and goes in its own CARES 4.0 package for Covid-19 that should add another $ 1 billion to the mix. ”
The US dollar also continues to “break, pushing precious metals higher, although simmering tensions between the United States and China are supporting the dollar for a complete collapse,” he said in comments by email.
Meanwhile, silver prices also recently rebounded to their highest settlement since 2013, with September SIU20 silver,
contract on Wednesday settling at $ 23,144 an ounce. It ended Friday at $ 22.85, up 15.6% on the week.
“This is usually the quiet time for gold – the summer crisis,” said Ross Norman, chief executive of precious metals news and information provider Metals Daily. “Well, not this year.”
In a forecast issued to the London Bullion Market Association in December 2019, he had predicted that gold prices would hit a record high this year. Given that, he said “it is not surprising that he did it. The move “has been faster than we expected.”
Read:Why has gold become a ‘weapon of choice’ for investors?
“Actually, pretty much everything is going the way of gold: record debt, epic rise in the money supply, silver recovery, negative real returns and even a dollar correction,” Norman told MarketWatch.
George Gero, managing director of RBC Wealth Management, told MarketWatch that gold’s upward momentum is “caused by a perfect storm of pandemic headlines, benign dollars, and interest rates as global economic stimulus grows.”
“This may last longer than usual,” as the pandemic casts a shadow over Europe, South America, the Far East and the United States, he said.
Contributing to the appeal of the gold paradise are mounting tensions between China and the United States, upcoming elections in the United States, concerns about an increase in debt due to continued stimulus and riots everywhere, Gero said.
Gold prices have risen about 50% since the summer of 2018, when the metal hit less than $ 1,200 an ounce, said Adrian Ash, director of research at BullionVault. That’s the fastest gain in two years since New Year 2012, he said.
The yellow metal has also risen around $ 400 an ounce since the collapse of COVID-March 19, “its highest gain in 17 weeks since the peak of September 2011 and before January 1980,” Ash said, adding that trading volumes at BullionVault, an online site The platform for physical precious metals reached $ 28.9 million, which was the third busiest day in history, after March 17, when the COVID crisis really broke out, and on 24 June 2016, the day of the result of the UK Brexit referendum.
“The hot money finally came together,” said Ash.
That said, analysts warned that gold could soon see a correction.
Prices could drop “in profit taking,” Norman said. At the same time, the stock market “is disconnected from the real economy and a sell-off could see margin gains again as we saw” in the first quarter, prompting traders to sell gold to cover those margins.
Gero also expressed caution. “Next week, the expiration of options on Comex, with options in the money that become futures contracts that need cash margin, could lead traders to take profit” in gold, he said.
However, even if there were a pullback in gold prices, Norman said “all he would do would be to provide a new buying opportunity … for that window to close fairly quickly.”
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