The price of gold futures for August delivery on the New York Mercantile Exchange fell by US$11.10 to close at US$1942.30 per ounce, a decrease of 0.6%. Previously, the contract set a record closing high in Wednesday’s trading and rose for the 9th consecutive trading day. It set the longest continuous upward trend since January’s 10 consecutive trading days.
The Fed hinted on Wednesday that as the U.S. economy recovers from the new crown pneumonia epidemic, the bank plans to maintain a low interest rate environment for the foreseeable future, thereby supporting gold prices. But some analysts believe that the gold market may be entering a period of consolidation. In recent days, the price of gold has seen a historic increase, which is at least partly driven by the public health crisis, but the recent round of dollar weakness and the decline in US Treasury yields have also played a role in raising gold prices.
As of the close of the gold futures market on Thursday, the Intercontinental Exchange (ICE) U.S. dollar index, which tracks changes in the exchange rate of the U.S. dollar against six major international currencies, fell 0.2% and continued to hover near its lowest level in two years. Treasury bond yields fell to about 0.55%. Under normal circumstances, a fall in the exchange rate of the U.S. dollar will cause the price of dollar-denominated commodity futures such as gold and crude oil to rise, because investors holding other currencies will have lower costs for buying these commodities. At the same time, since gold, like other commodities, is a non-interest-bearing asset, the decline in Treasury bond yields is a positive factor for gold prices.
Mark O’Byrne, the founder and executive director of GoldCore, a Dublin-based gold trader, said that, as predicted by industry insiders, the price of gold has approached the $2,000 per ounce mark, but in the short term , The price of gold “will see a sharp correction.” He pointed out: “Before a large-scale short squeeze pushes the price of gold to a higher level, its price is likely to go down in the short term.” Obern predicts that gold is “very likely” to rise to every dollar in the next 12 months. $3,000 per ounce. He said: “We should focus on value, not price-it is important for investors to focus on the value of gold as a hedge and safe-haven asset, not the high nominal price in dollars.”
Obern also pointed out: “History shows that we will be able to overcome the coming difficult period because human beings are resilient and vigorous. Those investors who hold precious metals will survive, and many people will be in the coming Thrive in depression.”
At the same time, according to a report released by the World Gold Council (WGC) on Thursday, in the second quarter and the first half of this year, global gold demand has generally declined, but as exchange-traded funds (ETF) hold The amount reached its highest level in history at the end of June, and investment demand for gold climbed to a record level. The association’s research director Juan Carlos Artigas said in a statement that gold’s performance in the first half of 2020 is “both expected and extraordinary. It is worth noting.” What’s more, despite the stock market’s gains, ETF capital inflows and price performance are still setting records, which clearly shows that investors are increasingly using gold as a tactical and strategic portfolio asset.”