Gold hit its highest price for the first time in 9 years. After a 18% surge in 2019, gold prices have moved sharply higher this year. The positive trend in the gold spot prices is chiefly due to the escalation in the geopolitical tensions and uncertainty over the second stimulus package. Gold’s also getting support from a confluence of low or negative real rates, a weaker dollar and expectations of rising inflation.
Gold prices rallied to record highs on Thursday as the U.S. dollar sank to its lowest level in nearly two years. Gold has been “making record highs consistently for a couple of years now in other currencies, so the dollar was the lone exception,” said Peter Schiff, CEO and president of Westport, Connecticut-based Euro Pacific Capital. “Now the dollar's joining the party,” FOX Business wrote.
Spot gold topped $1,900 an ounce for the first time since 2011 and edged closer to an all-time high with flaring geopolitical tensions and concern over global growth driving demand for haven assets. Increasing signs that the prolonged pandemic is stalling an economic recovery and the recent spat between China and the U.S. are underpinning the metal’s appeal. Gold’s also getting support from a confluence of low or negative real rates, a weaker dollar and expectations of rising inflation amid massive liquidity injections from governments and central banks around the world, Bloomberg reported.
4 month ago, gold hit its highest price for the first time in more than seven years. Gold prices rose above the $1,700 per ounce level in March. After a 18% surge in 2019, gold prices have moved sharply higher this year amid coronavirus crisis and as central banks cut interest rates to try and stem the damage.
Gold has been treasured since ancient times for its beauty and permanence. Most of the gold that is fabricated today goes into the manufacture of jewelry. However, because of its superior electrical conductivity and resistance to corrosion and other desirable combinations of physical and chemical properties, gold also emerged in the late 20th century as an essential industrial metal.
Gold price is up nearly 23% year-to-date. The positive trend in the gold spot prices is chiefly due to the escalation in the geopolitical tensions and uncertainty over the second stimulus package. Gold traders are also betting on the yellow metal price because there is uncertainty about the future of the U.S. unemployment benefits program. It will expire this month, which means that Americans will no longer get the extra $600 support in terms of jobless benefits. The debate is on in Washington about the second stimulus round that could include jobless benefits and stimulus checks for Americans. However, so far, it appears that politicians are playing politics, and there may not be any outcome by the end of this month, Forbes wrote.
Gold performs critical functions in computers, communications equipment, spacecraft, jet aircraft engines, and a host of other products. Although gold is important to industry and the arts, it also retains a unique status among all commodities as a long-term store of value. Until recent times, it was considered essentially a monetary metal, and most of the bullion produced each year went into the vaults of government treasuries or central banks.
Gold’s strong run has also turbocharged the share-price performance of big producers, which enjoy bumper profits when prices rise because there is no accompanying increase in costs. The NYSE Arca Gold Bugs index is up almost 37 per cent so far in 2020. Also, silver, which hit a seven-year high above $23 an ounce on Wednesday, is heading for its biggest weekly gain in decades, according to The Financial Times.