Despite initial anticipation of a rate reduction from the US Federal Reserve, gold prices have been on the ascendency, nearing the $2,200 mark. The incline in gold prices is a result of increasing demands occasioned by the global pandemic and its corresponding economic volatility. As a result, gold has emerged as the safe haven asset for investors, pushing the prices further.
Interestingly, the sliding US dollar has also stimulated demand for gold, making it more appealing for those with other currencies. Current data suggest this trend might continue, keeping the gold market animated in these unstable economic conditions.
Economists from ANZ Bank highlight that macroeconomic and geopolitical events are not solely responsible for the upswing. They believe the market speculation, lending environment, and the state of the housing market among other factors also play a part. They argue that a thorough analysis beyond macroeconomic and geopolitical events is needed for a comprehensive understanding of this increase.
The market expects a rate decline in June, which, however, has not resulted in a corresponding decrease in the US Dollar value. This could imply a potential weakness in the US currency structure. As such, economists and market analysts need to scrutinize this inconsistency closely.
In recent days however, the price of gold has faced a downward trend, reducing to a week-low. This, investors perceive, is due to speculation that the Federal Reserve might maintain high rates. The stronger dollar and U.S. Treasury yields have also put negative pressure on the non-yielding bullion’s price.
Investing in open markets carry substantial risks, including the possible loss of the principal amount. Therefore, investors must understand and accept these associated risks before making any investment decisions. This forms the basis for informed, mindful investment.
Finally, any information provided should not be considered as investment advice. Therefore, it is imperative to perform comprehensive research prior to finalizing any monetary decisions related to investing, with prime focus on reducing risks and safeguarding hard-earned money.
