The gold rate climbed to new records on Monday, sustaining the six month high hit they attained last week. Meanwhile investors continue to remain concerned about the political turmoil in the face of a US government shutdown. President Donald Trump continues to remain adamant about his position to sustain the shutdown. The US Federal Reserve also played a pivotal role in increasing the value of gold rates.
Spot gold went up by 0.74% percent at $1,276.93 for an ounce. This is the bullion’s highest since June’s $1,266.40. Gold futures also went up by 0.44 percent to $1,277.50 for an ounce. Other external factors responsible for the new upset include the weakening dollar and the chaotic equities market. Investors are now looking to allocate more of their funds to the gold.
Following suit are the Swiss franc and Japanese yen which are considered by investors as a hedge against political and economic turbulence.
Economic forecasts show that the feds are only going to see two more interest rate hikes in 2019 compared to the 3 projected in earlier September. Peter Fung, an expert in precious metals in Hong Kong’s Wing Fung Precious Metals said that gold prices will stick around the ballpark figure of $1,250 until the end of this year. Picking off where it left its trail in the year 2019.
Also showing improved interest in the bullion are the higher net long positions in Comex gold to their six month high this week. SPDR Gold Trust also increased its holdings from 0.5 percent to 772.67 tonnes this Friday. The company is the world’s largest exchange traded fund that is backed purely on gold.
The precious metals market as a whole has experienced a surge in value due to the increased interest in gold by hedge fund managers. Wednesday saw Palladium spot rising to $1,258.50 for one ounce while silver spot rose to $15.23 per ounce. Meanwhile bitcoin prices are at a slippery slope, barely sustaining its position at $4,000 on Thursday, with many speculating that prices might just hit an all time low at $1,500 next year.
Palladium is growing in favor by automobile manufacturers because of its important role in car engine catalysts, mitigating pollution and complying with more stringent government regulations. Countries all over the world, including China, are cracking down on pollution, requiring vehicle manufacturers to take strict measures to reduce the extent of car pollution on the environment.
Palladium is also used in other markets including electronics, dental fillings and crowns and jewellery among other things. Its demand has been growing but supply hasn’t caught up yet, which helped bolster it past the value of gold for a brief period this month.
But for now, gold is the ultimate safe haven asset. The only question most economists are asking is: will gold sustain its new-found highs to break past the resistance at $1,300 for an ounce or will it stay at its current pricing? Some experts speculate that deflationary threats might just push gold prices back to its multi-year low.