Gold investors on Thursday saw the precious metal rose marginally as US dollar plummets to a six-month low on New Year’s Eve.
The fall of the dollar came as expected after some market analysts who have predicted that the booming US economy might soon come to an end.
Brian Lan, a commodity dealer, said the weak dollar has to some extent given a boost to the precious metal at the international market but that the announcement by Donald Trump that both the White House and the Chinese would sign the ‘phase one’ deal on January 15 has affected the dollar.
“The first phase has been priced in for some time in the gold market, but it’s affecting the US dollar, which is weakening quite a bit, and that is supporting gold,” Lan said.
Despite this news, investors are bent on knowing the details of the agreement as this could propel the global gold market to extend the bullish trend even much longer.
Spot gold rose by 0.2 percent to $1,519.75 per ounce after it got to its highest price since September 25, 2019, at $1,525.20 on Tuesday while the US gold futures were down by 0.1 percent at $1,522.40.
The dollar started the New Year unimpressively as the US economy is gradually heading downward.
The dollar index against other currencies fell by 1.9 percent in December, the decline of the currency makes gold cheaper for investors of other currencies which have led to a rise in prices of the precious metal.
As the dollar declines, Lan notes that there could be a rush into the gold market and the stock markets as well.
He said, “A key thing to look out for is stock markets, which have been setting new highs and in case there is some correction, we can see some capital flows into gold.”
Another analyst, Benjamin Lu, predicts despite the high volumes of trade in the US stock market, gold prices would still be low for a little while.
“Gold has continued to demonstrate bullish inclinations as prices breached $1,500 last week despite new highs in the US stock market. Bullish technical posturing will likely support prices as trading activities remain soft for the near term,” Lu said.
“A continuation of the positive trend scenario will see gold prices test the next main station at $1,540,” Lu added.
Elsewhere, silver stayed up by 0.1 percent at $17.84 per ounce, while platinum gained 0.7 percent at $970.05 and palladium soared by 0.2 per cent at $1,942.78 per ounce.
Frontpage September 24, 2019