Gold’s safe haven credibility standing the test of time
A weaker dollar and ongoing geopolitical tensions might push the price of the gold and gold miners’ stock up over the next few weeks.
This year gold has already gained 3.5% and now it is trading just below its 2017 peak, with some experts saying we may expect a continuation of the upward trend in the coming weeks.
On Tuesday gold prices rose for a third straight session while the dollar floated near a five-week low despite receding trade tensions between the U.S. and China.
The dollar has weakened after the Federal Reserve hinted there might be a less-aggressive monetary policy this year than some market participants had been anticipating.
In Asia gold overnight reached $1350 per ounce before falling back to Friday’s close at $1347. In London trade it touched $1352.
“Gold prices continue to ratchet higher as the U.S. dollar weakens despite equity markets rebounding on easing concerns about the likelihood of a trade war between China and USA. Realistically there are plentitudes of market turmoil in the making that continue to make gold the go-to place to hedge risk.”
Stephen Innes, APAC trading head at OANDA
Silver meantime jumped to $16.76 per ounce, pulling the Gold-to-Silver ratio– which measures how many ounces of silver you could get for an ounce of gold – a little lower from a 2-year high of 81.
Silver futures in turn gained 0.64% to $16.790 a troy ounce, and platinum futures jumped 1.08% to $966.70 an ounce.
The size of the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust (NYSEArca:GLD), grew by 10 tonnes to reach a 5-month high of 850 tonnes.
“It could just be they’re using gold as a hedge against things that hit the headlines and maybe the hedge funds haven’t been focused so much on political news. Much of what gold will do this week will be headline-driven, with trade news being front and centre”
Edward Meir, analyst at brokerage INTL FCStone