Gold continued its bullish rally on Wednesday morning. The precious metal extended its new record run above the $2,000 mark, due to a weaker greenback and hopes of more stimulus packages to revive the world’s fragile economy.
The price of Spot gold as at 05.59 GMT was up by 0.20% to trade at $2,023.41. Gold prices have gained about 33% this year.
The U.S. dollar, which is often considered a safe-haven currency, dropped by 0.3% against its major rivals, thereby making gold cheaper for holders of other currencies.
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Why it’s happening
As usual, AxiCorp’s Chief Global Market Strategist, Stephen Innes, explained to Nairametrics the macros helping gold to surge past record highs. He said:
“Concerns remain around a second wave in Europe as daily case growth has started to accelerate from shallow levels in most countries.
“However, the levels are nowhere near that seen in the US, which is now on a downward trajectory.
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“Still, markets fear a second Covid-19 surge into winter (northern hemisphere), and the associated rise in volatility still favors gold as a defensive strategy.
“But the economic damage is done, and even a vaccine is not going to bring back lost assets in Global GDP terms that when up in smoke. The only real cure to claw back some of that lost GDP is global interest rates low for as far as the eye can see and even redoubled amounts government stimulus, which is highly favorable for gold.”
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Also note that the price of gold also continues to be supported by the ongoing the weakness in the dollar as well as hopes on negotiations for a new COVID-related aid package in the U.S.
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