USA gold rate is rising to their highest level in years
In the past twelve months, the gold price has fallen by almost 5 percent. But there are more and more signs that a trend break is imminent.
It seems that given the growing number of political and economic crisis situations, some investors are craving security and are turning to gold. The price of the precious metal has risen by more than 2 percent in the past month.
A supporting factor for the gold price is the weakness of the US dollar. The US Dollar Index, which tracks the value of the greenback against the world’s six major currencies, has fallen slightly for the first time in a long time since early October. The past has shown that the dollar and the 22K gold price tend to develop strongly in opposite directions.
According to a study by Commerzbank, the US dollar is likely to weaken further in 2019. The bank’s currency experts argue that the Federal Reserve’s rate hikes are coming to an end and that the farewell to the ultra-lenient monetary policy of the European Central Bank (ECB) is also near. That could work out well for the gold price, according to analysts.
The weakness of the dollar and speculation about additional fiscal stimulus are causing the price of gold to rise sharply.
Gold continue to advance on the commodity markets on Wednesday. The gold price rose briefly to $ 1,865 an ounce, the highest level in nearly nine years. Silver prices climbed to $ 23 an ounce, the highest level in nearly seven years.
Traders refer to the dollar’s weakness against most other major currencies. Because the gold price is expressed in dollars, a weak green note makes gold cheaper for non-US investors. Therefore, a fall in the dollar usually leads to an increase in the price of gold, and vice versa. You can use gold calculator to calcite exactly.
Protection against inflation
Speculation about additional budgetary stimulus also supports the gold price. Some investors are concerned about rising budget deficits and public debt, as well as central banks’ money creation. They fear an acceleration of inflation in the long run and buy gold trackers or physical gold to protect themselves against it. The European Union reached an agreement on a recovery fund of € 750 billion on Tuesday. The US is also considering additional support from the budget for the economy.
Specialists expect the gold price to rise to a record high in the coming weeks or months. It is a “matter of time” for gold to beat the 2011 record, said Ed Morse, Citi analyst. The precious metal peaked at $ 1,921 an ounce nine years ago. Earlier this year, the gold price in euros rose to a record high of more than 52,000 euros per kilogram.
The gold price in dollars has already increased by 22 percent since the beginning of this year. Like other safe havens, gold benefited from the corona crisis. Negative real interest rates, a consequence of massive bond purchases from central banks, are also supporting the gold price. Because gold does not yield interest, the precious metal becomes more attractive the lower the interest.