Gold gained for a second week in a row breaching the $1,900 price level. The gains were triggered by high hopes for a new U.S. Covid-19 relief deal and the sudden plunge in the U.S dollar on Friday.
U.S. gold futures settled at $1,926.20/ounce up to $31.10 on Friday. For the week, it gained about 1%. On the other hand, Spot gold, known for tracking bullion prices in bullion, gained 1.8% to settle at $1,928.31.
In addition, the U.S dollar plunged heavily on Friday, as it headed towards its second consecutive weekly loss over higher commodity prices. The U.S. Dollar Index, which tracks the greenback against a basket of other currencies, edged down 0.68% to 93.012.
“Gold prices skyrocketed … after the White House blinked first over the stimulus deadlock,” said Ed Moya, an analyst at New York’s OANDA. “Gold looks like it will benefit from a stimulus deal before the election. It is unclear if Democrats will accept the latest … offer, but it seems the White House is determined to get something done.”
Why gold price is rising: Gold prices have recorded impressive gains so far in 2020, propelled by low-interest rates in many emerged markets such as Europe, Japan, and America. The widespread stimulus from global central banks has also helped in boosting the price of the safe-haven asset, considered a bulwark against inflation and currency debasement.
Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, explained the macros that gold traders will have on their minds, especially in the coming week. He said:
“After a hectic week on the gold desk, traders are left taking inventory of a crazy week on the gold counter.
“I think gold investors are fully loaded and not reacting to any correlations (for example, the weaker dollar higher gold), which suggests to me that investors are marking time while institutional traders are going over the data logs to game plan for next week.”