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Home Markets Commodities

Gold surges past record high as U.S dollar hits record low

Olumide Adesina by Olumide Adesina
July 27, 2020
in Commodities
Gold surges, Joe biden
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Gold continued its surge early Monday morning at London’s trading session. The yellow metal passed its highest price record amid growing concerns over USD dollar’s plunge. The dollar has fallen to its lowest point in over a year, as geopolitical tensions between the US and China intensifies.

For specifics, gold futures gained 1.57% to $1,928.55 as of 6.00 am GMT, smashing the record of $1,923.70 which was recorded in 2011.

Some insights: Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, explained the macros that are making gold hit record highs. He said:

“Gold cleared USD1,900/oz on geopolitical risks, weak USD without raising any eyebrows, suggesting the yellow metal has amplitude to hit an all-time high of USD1,920/oz on risk-off demand bolstered by recent communications from the US Fed.

READ MORE: Treasury Market Opens Bearish as Market Players React to Higher CBN OMO Rate

“They have made it abundantly clear that the FOMC will soon pivot away from stabilization towards accommodation.”

Innes also explained why the plunge of the American dollar is a major contributing factor to gold’s surge in prices.

“Gold is the clear beneficiary of safe-haven demand and beating the dollar to the punch and partying like it’s 2011 as real yields are nose-diving, the dollar is tanking against G-10 majors, and money supply is rocketing higher. With no competition from bond yields, Gold’s glittering appeal stands above all.

“It is striking to see the extent to which Gold has tracked real yields in the last 18 months. Gold has virtually been tethered to the hip. The question of whether it can keep rallying is one of whether real yields can keep falling.”

READ MORE: 83% of BTCs addresses are smiling to the Bank 

The rush for gold by global investors has been boosted by a weakened greenback, which fell to the lowest point in over a year, on hopes that the Federal Reserve will continue to stimulate the world’s largest economy when it convenes this week.

What this means: The implication of this trend is that many global investors are abandoning fiat currencies and moving in large numbers to precious metals, primarily for the purpose of hedging against inflation and preserving wealth.

Related

Tags: Business NewsGold futuresgold priceUSD dollars

Comments 1

  1. Toyin Aderemi says:
    July 27, 2020 at 11:23 am

    How advisable is not to invest in gold now that the price is soaring? If it’s, indeed a good investment now, at what point could one sell such investment for profit?
    Thanks.

    Reply

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