Gold has been the darling of investors seeking for safe haven in 2020, at the back of Covid-19 pandemic, which is devastating economies and companies earnings globally.
The price of Gold has rallied for 10 straight weeks, marking its longest stretch of gains since late 2002.
Supported by a weak US dollar, low yields, and fiscal stimulus, Gold broke the $2,000 mark for the first time ever last week. Gold price has surged over 30% YTD, making it one of the best-performing commodities.
At 18:423GMT on Monday, Gold is trading at $2,020.92 a $15.07 decline (0.74%) from previous close, with a day high and day low of $2,049.70 and $2,020.20 respectively. Its 52 week high and low prices are $2,069.10 and $1,445.80 respectively
The increasing tension between the United States and China has increased investor’s interest in the precious metal. Last month, US ordered the closure of the Chinese consulate in Houston and China subsequently ordered the closure of the US consulate in Chengdu .
Frank Holmes, CEO of US Global Investors told CNBC Monday: that Gold prices could rise more than 90% and hit $4,000 in the next three years as central banks show little sign of reducing monetary stimulus, according to the CEO of US Global Investors.
He said “It’s quite easy to see gold going to $4,000.” According to Holmes rising stimulus from central banks is causing gold to soar to unprecedented levels.
Have you read?
- FG of Nigeria set to roll out support schemes for MSMEs nationwide
- CBN devalues the Official Rate of Naira for the second time in 2020
G-20 finance ministers and central banks are “working together like a cartel and they’re all printing trillions of dollars,” he added.
Expansive monetary policy is usually supportive for gold prices, as it tends to drive down borrowing rates. Due to low borrowing and savings rates, investors will lose less from holding bullion compare to rising rates thus the increased interest in assets that offer more attractive yields.
Despite the bullish view of Holmes, Yung-Yu Ma, chief investment strategist at BMO Wealth Management, said during an interview with CNBC warned that the continuing rise in the price of Gold depends on a number of factors. He said that these factors could erode the gains the gains seen in the Gold’s price.
Ma told CNBC Monday: “We’re just cautious extrapolating these current factors … especially when we know there are two big events on the horizon that could change that trajectory. One is, of course, the vaccine development, and the other is the elections.”
“We think … especially the vaccine has potential to shift some of those positive factors that are working right now in the favor of gold,” he said.
Third Bridge Group, a US-based research provider, has said gold prices may sink below $1,600 after the US election.
But analysts at data provider Refinitiv said last week any delay to the US elections, as US president Trump has suggested, may cause fresh uncertainty and could be a factor continuing to support gold prices according to Business Insider.
Written by;
Ifunanya Ikueze
