Bloomberg reported that on Thursday, the price of gold shot up to the $1,300 mark, extending its rally to the new year. Investors crowded around the precious metal as the stock markets across the globe retreated, thanks to signs of a global economic slowdown piling up. The continued partial shutdown of the US government also contributed to the risk-averse mood in markets.
Gold futures went up by as much as 0.4% to trade at $1,300.04 per ounce on the Comex. This is the highest price the precious metal has seen since June of last year. Spot prices for the metal were not far behind, going up as much as $1,298.60 per ounce.
According to the news report by CNBC, the price of gold has reached a 6.5 month high. Spot Gold prices went up by 0.42% to trade at 1,290.20 an ounce, while gold futures went up $10 higher to close trading on Thursday at $1294.80 an ounce.
According to the executive director at Taurus Wealth Advisors Plc., Rainer Michael Preiss, this rally in the precious metal is based on the increasingly strong realization that gold is a “safe haven” investment.
Preiss also cited the possible global economic slowdown, possible mistakes by the US central bank as well as the rising debt that the US has as reasons for investors turning to gold.
George Gero, an analyst at RBC Wealth Management, stated that the price of gold going past the $1,300 mark was a key psychological barrier that was crossed, which could lead to an increase in buying. He stated that investors currently had serious concerns about the stock market, the economy as well as politics, because of which they were looking for investment havens. Gero also stated that if investors’ concerns continued to grow, the price of gold could even touch $1,350 per ounce.
According to Saxo Bank’s analyst Ole Hanson, gold is overbought at the moment on most metrics. The price of the metal needs to consolidate, however, currently with the speculative long still in the process of building even further, the market could look at even higher prices.
Hanson stated that if the fourth quarter’s trend of a slump in the dollar, yields as well as equities continues, gold could actually shoot up even higher and even touch $1,380 per ounce.
According to the latest update by Reuters, the price of gold erased most of the gains it made after the Asia stock market regained its footing thanks to an announcement by Beijing that a new round of talks with the US was being opened with regard to trade between the two countries.
While the price of gold briefly touched $1,300 earlier in the session, it settled up by 0.1% to close trading at $1,294.90 an ounce. Gold futures also closed up by 0.1% at $1,296.50 an ounce.
According to the latest announcement on the Chinese Commerce Ministry’s website, a team led by the US Deputy Trade Representative Jeffrey Gerrish would visit China to conduct discussions with their counterparts in Beijing.
Thanks to this announcement, equities in the Asian markets showed some gains in Friday’s trading. However, fears of a recession still have kept the markets on tenterhooks as they await the decision of the Federal Reserve with regard to interest rates.
The price of gold is very sensitive to the increase in interest rates in the US, since they increase the opportunity cost of investing in non-yielding commodities such as bullion.
The price of other precious metals such as palladium and silver have remained mostly flat during this time. Palladium is trading at $1,263.90, while silver is priced at $15.74. Platinum, on the other hand, had gone up by 0.2% to trade at $799.74.