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(Kitco News) – The giant that is the gold market is unstoppable, it started the week reaching an all-time high against the US dollar.
The gold market made its historic move on Sunday night during the Asian trading session. First, spot gold hit its all-time high above $ 1,920, and then August futures quickly followed suit. August gold last traded at $ 1,922.70 an ounce, over 1% on the day.
Although the record has been an important target for analysts and investors, some also see it as a small increase in speed within a much larger uptrend.
In a recent interview with Kitco News, Marc Chandler, chief market strategist at Bannockburn Global Forex, said he expects gold prices to easily hit $ 2,000 an ounce before this current rally ends.
“It is difficult to speak of price resistance never seen before, but if our view of interest rates and the change in the dollar cycle is fair, then $ 2,500 may not seem unreasonable,” he said in a report Sunday, reiterating his current bullish stance.
The market has experienced a significant bullish momentum in recent months as the global economy has turned upside down due to the COVID-19 pandemic. According to some analysts, the growing geopolitical tensions between China and the United States are adding more fuel to the demonstration.
Steven Dunn, head of publicly traded products at Aberdeen Standard Investments, said that while the rise in gold above $ 1,900 an ounce has been dramatic, it is not surprising.
“The combination of mounting tensions between the United States and China and ongoing fears about the economic impact of the coronavirus pandemic have provided a lot of fuel for this increase, and neither appears to dissipate anytime soon,” he said in a statement to Kitco News. . “As investors continue to face volatility and uncertainty, the attractiveness of safe assets like gold and silver will only increase.”
In a recent interview with Kitco News, Afshin Nabavi, head of commerce with MKS (Switzerland) SA described the recovery of gold as a “higher one-way street”.
He added that the break above $ 1,900 per ounce was a sign that it was only a matter of time before all-time highs were removed.
“Wherever you look, the world is a mess and that is going to raise gold prices,” he said.
Analysts have noted that due to the COVID-19 pandemic, central banks around the world have implemented aggressive monetary policy stimulus measures, pumping billions of dollars to stabilize financial markets.
These stimulus measures have pushed bond yields significantly lower, a significant tailwind for gold.
“With real yields likely to remain low for some time, we now expect the gold price to remain high for the foreseeable future,” said commodities analyst at Capital Economics.
Analysts also view the continued weakness of the US dollar as another supporting factor for higher gold prices.
Daniel Pavilonis, a senior commodity broker with gold RJO Futures, continues to look attractive as the US faces critical support in a major long-term trend line.
“We have printed so much money and there is so much risk on the table that it is difficult to see how the US dollar recovers from current levels,” he said.
Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a request to make any exchange in products, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept guilt for loss and / or damage resulting from the use of this publication.
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