When we last looked at gold at the beginning of the month, it had hit a brief dip coinciding with the NFP release, but since then has come back with a vengeance, reaching further and further heights.
The yellow metal has surpassed the $1,630/oz mark, hitting a 7 year high, and is showing no signs of stopping. For reference, just at the start of the month it was trading around $1,570.
As expected, investors are continuing to flock to the classic safe haven asset, resulting in a meteoric rise, as not since 2013 has the yellow metal reached such figures.
But what the real surprise here is that analysts are predicting gold to continue to trend to the upside. For example, Citi Firm is forecasting it to pass $2,000/oz within the next 12-24 months. And with the way it’s looking, this could very well be the case.
Obviously, the biggest factor impacting the global economy is the coronavirus, as there has been an increased number of infections outside of China, namely Japan and South Korea. Even as the number of new cases and deaths is decreasing in China, global sentiment appears to be cautious and uncertain.
This can be seen in the drop in currencies largely across the board, such as the NZD, AUD and EUR.
It is also just common practice for traders to invest in gold as a way of diversifying their portfolio and as insurance, even though it does not generate interest.
Surprisingly, the USD has also been on the upside, despite the fact that usually when one goes up, the other goes down. This means that a weaker dollar is not the reason for gold’s rise, which makes it even more impressive.
Just like gold, other safe haven assets have also seen a rise, showing that the market is indeed reacting to the economic uncertainties. Silver, another attractive metal investment, increased by 0.5% for the day to $18.54/oz, and is up almost 3% since the beginning of the year, and the Japanese Yen has also managed to stabilise.
For more technical analysis on Gold, watch our video here by Anish Lal at BlackBull Markets, or on Instagram and Twitter at blackbull_markets and @blackbullforex, respectively.