Gold Soars and Hits Historic Records

The price of gold soars to new levels

Coronavirus pandemic, China-U.S. Tensions and depreciation of the dollar are more than ever prompting investors to buy gold

Faced with the coronavirus pandemic and Sino-American tensions, the yellow metal is aptly named as a safe haven. The gold price thus reached a new record level on Monday, also helped by the depreciation of the dollar. An ounce was trading at an all-time high of $ 1,944.71 shortly after 5 am. His previous session record of some $ 1,921 dates back to September 2011.

More than 27% increase since January 1st

In total, the price of gold has appreciated by more than 27% since the beginning of this year due to uncertainties about the extent of the global economic crisis. In addition, the broad monetary easing measures decided by the US Federal Reserve (Fed) have pushed the dollar lower in recent months, further enhancing the attractiveness of the yellow metal. Since gold is denominated in dollars, a decline in the US dollar makes it less expensive for buyers using other currencies.

A rally over $ 2,000 an ounce?

Above all, this movement should continue. Analysts predict that gold should soon exceed $ 2,000 an ounce, while the Fed may deliver new exceptional measures on Wednesday after its monetary policy meeting. The negotiations which are slipping between the White House and Congress on a new plan to support the American economy, as well as the outbreak of the coronavirus in the United States, which complicates the resumption of activity in the country, are also currently pulling the dollar on the decline. On Monday, the greenback was at its lowest against the euro in nearly two years, with one euro trading for around $ 1.17.

“Gold is clearly the beneficiary of the demand for safe havens”, while the returns of other investments “take a nosedive”, such as those of sovereign bonds under the effect of massive interventions by central banks, underlines Stephen Innes of ‘AxiCorp. Some experts go so far as to predict a price of $ 3,000 per ounce of gold futures, convincing many investors that it is not too late to jump on the bandwagon. In the wake of the price of an ounce, the shares of Chinese mining groups like Zijin Mining Group and Shandong Gold Mining soared on the stock market on Monday.

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