Gold rally continues due to geopolitical tensions

According to some analysts, the rally of gold price will be supported by an unstable geopolitical situation. This condition is aggravated due to the difficulties around Brexit and the unclear fate of the agreement on mutual trade between the US and China. Against this background, investors are still seeking to invest in safe assets, which include the yellow metal.


The world's most popular precious metal maintains its uptrend. In August 2018, after reaching a minimum level of $ 1,160.88 per 1 ounce, the price of gold increased by 14%. At the beginning of 2019, its yield was an additional of 4%. According to a major expert and investor from US Global Investors, Frank Holmes, gold prices will continue to rise in the near future. The analyst is optimistic about the prospects for the precious metal. Experts of the large American bank Goldman Sachs agree with him. They predict a rise in the price of the yellow metal by the summer of 2019 by 4% to $ 1,374 per ounce. Goldman Sachs is confident that in a year the cost of the precious metal will reach $1,425. According to experts, given the possible start of a recession in the US economy and instability in global stock markets, the implementation of such a scenario is quite likely.

Experts believe that a number of reasons are important factors in the growth of the price of gold. One of them is the fall in the yield of US government bonds, which began in the autumn of 2018. In this situation, the US currency will be under pressure, which will positively affect the value of gold. Recall that the US dollar and the yellow metal are inversely correlated to each other. According to analysts' calculations, technical factors also indicate a rise in the price of gold. In 2012-2013, the precious metal fell heavily. At the moment, the price ranges from $1340 to $1350 per 1 ounce continues to be the resistance level. As soon as the price of gold can rise above this level, its growth will be more confident.

Another important factor in the rise in the price of gold may be the conclusion of a trade agreement between the United States and China. In this situation, the Chinese economy will receive a new impetus for development. This will increase the demand for commodities, including the yellow metal. Recall, the Middle Kingdom consumes almost 50% of many commodities. In a stable economic situation in the PRC, the middle class will acquire more jewelry.

The third key factor in the growth of gold prices is the policy of a number of world central banks. They regularly buy yellow metal for the reserves of their countries. Gold is becoming an important asset for them to diversify international reserves. Last year, global regulators acquired a record volume of gold since 1968. According to experts of the World Gold Council, the previous record could be broken at the end of this year.

The material has been provided by InstaForex Company -

No comments:

Post a Comment