Gold prices surged past the $2000 per ounce threshold on Tuesday (August 4) for the first time reaching a peak of $2020 per ounce.
The price of the precious yellow metal continued its rally on Wednesday (August 5) as it reached $2048 per troy ounce.
This as investors get bullish in capitalizing on the weakening dollar and the uncertainty of various economies due to the COVID-19 pandemic and the lockdowns that have crippled businesses.
Spot gold prices have been on a steady increase this year posting an over 30% surge for 2020 alone.
Gold prices have been increasing from a starting point of just $1,500 per ounce in January to close to $2000 in just a matter of six months by July.
Aside from Gold, the price of another precious metal Silver has also been on an upswing at $27.03 per ounce recording a 5% increase while copper prices are at $2.92 per pound.
What were the factors that helped increase gold prices?
The reason for gold prices continuing surge is the cloud of economic uncertainty brought about by the Coronavirus pandemic.
Another factor seen by analysts as contributing to the gold price increase is the ongoing economic and geopolitical tensions of the trade war between the US and China.
Even the Beirut blast that killed more than 100 people and injuring more than 4,000 on Tuesday was seen by strategists by Mizuho Bank, as reported by CNBC, as a contributing factor for Tuesday’s breaching of the $2000 per ounce threshold for gold.
Many traders have been hoarding gold as a safe investment as a cloud of uncertainty from the pandemic and ongoing political tensions continue in the past months.
Aside from being a safe investment hedge, gold is also seen as a haven for investors for possible soaring inflation.
Why are people investing in gold?
As a traditional form of investing, buying gold is a wise move for many investors as the precious metal is a stable investment while currencies like the US dollar depreciate due to the pandemic.
Gold prices have also been in an upswing as governments and central banks have been injecting money particularly the US dollar to keep their economies afloat.
Many traders are seen to be hoarding gold to fend off the further weakening of the US dollar and potentially lowered investor returns on bonds as more economic stimulus is expected in the coming months.
To date, the US federal budget is expected to be on a deficit of $2.7 trillion in the first three quarters of the year.
This means an expected weakening of the dollar is in the offing and will further drive gold prices up in the coming months up to 2021.
But buying gold as its prices are high is not what traders are looking for in the next few days.
They are waiting for the corrective pullbacks in prices that may be an opportunity to start buying to at least gain something from investing in the often yield-less precious metal.
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