After yesterday set the highest record in history, today Wednesday (07/29/2020) the price of gold was slightly corrected.
Understandably, prices have been rallying continuously, so that the correction becomes reasonable.
At 09.00 GMT+7, world gold prices in the spot market were priced at US $ 1,956.31 / troy ounce. Bullion prices fell 0.13% compared to yesterday’s closing position at US $ 1,958.93 / troy ounce.
“Gold is overbought and needs to be corrected,” StoneX analyst Rhona O’Connell told Reuters. “But now all are supportive; negative interest rates, intensive geopolitical tensions and huge uncertainties surrounding the economic and financial downturn of the virus.” he said
The dollar index bounced from a two-year low. The recovery of the dollar index that indicates the strengthening of the greenback is enough to press the price of gold. Naturally, because the price of gold is priced in that currency. A stronger dollar makes gold more expensive and can reduce buying interest.
The selling of the US dollar has eased ahead of the meeting of the US central bank’s policy-making committee and the hope that a large US fiscal stimulus package will be approved. The Fed, which starts a two-day meeting starting on Tuesday, is believed to still be accommodating
Throughout this year, gold as a safe haven asset has risen 27%. This was supported mainly by increasing doubts over the economic recovery from the Sino-US pandemic and tensions.
Gold that does not produce yields also benefits from low interest rates and fiscal stimulus worth jumbo because it is considered as a hedge against inflation and a decline in currency values.
All agreed, the current conditions are very favorable for gold. This was also conveyed by Uncle Sam’s global investment bank, Goldman Sachs.
The global investment bank on Tuesday raised its 12-month gold price forecast to US $ 2,300 / troy ounce.
“We have long maintained gold as the last choice currency, especially in an environment like today where governments debit their fiat currencies and push real interest rates to all-time lows,” Goldman said.
Real concerns about the fate of the US dollar as a reserve currency have begun to emerge, added Goldman Sachs.
“We see fears of inflation continuing to rise well into the period of economic recovery, creating an inflow into a sustainable gold ETF in addition to the structural weakness of the dollar, we see gold being used as a dollar hedge by fund managers,” Goldman said.