Gold lost about $70 after setting a new price record of $2,000 an ounce just a few hours ago at London’s trading session. This happened as market volatility in the precious metal market went bizarre.
At about 6.12 GMT, gold futures was trading at around $1930 per ounce.
What this means: Gold lost about $70 dollars within an hour because gold bulls got exhausted following the sudden price jump to $2000. In other words, gold traders pulled back momentarily, partly due to the fact that the U.S dollar regained some strength, thereby limiting gold’s rapid upside.
In the meantime, it appears that investors are still uncertain about which direction gold is heading. This has led to gold traders pulling back some of their long positions. Note that if global stimulus packages do not get withdrawn at some point, the world’s economy might suffer from a financial asset bubble.
Meanwhile, Stephen Innes, the Chief Global Market Strategist at AxiCorp, gave Nairametrics some insights regarding the drivers pushing gold to new record highs. He said:
“Gold is jumping in Asian trading hours again and is taking the rest of the precious metals complex higher. The latest surge in demand out of China suggests gold could easily break $2000, maybe even by the end of the week.”
READ MORE: BTC outperforms precious metals in H1 2020
Stephen Innes also gave an account of the U.S dollar weakness which had been helping to buoy the value of gold upward. He said:
“US-China relationship strains further; concerns about inflation as oil prices firm up alongside the broad U.S. dollar weakness which has gathered up speed and all of which makes for a perfect complimentary basket of drivers to push gold higher.”
The backstory: The rush for gold by global investors had 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.