Spot gold traded for $1,272.88 per ounce, reaching the highest value in six months this Wednesday. Worries over slow global economic growth and political uncertainty have pushed investors toward bullion which is considered to be a safe-haven metal.
Gold rates touched $1,274.68 in early trade, the highest since June 20. However, the US Gold futures went up by 0.4 percent, trading at $1,276.30 for an ounce.
Investors have been scrambling around ever since the US Federal Reserve decided to tighten economic policies and US government shutdown, with Trump threatening to continue the shutdown until his demands are met.
The US Senate and President Trump are at a deadlock over demands for more funds to build a wall along the borderline to Mexico. President Trump insists on allocating $5 billion on his project for the wall, which was an integral part of his presidential campaign, but it has been fiercely contested by Democrats who have rejected his requests.
The only way to end the shutdown requires the support of Democrats and a signature by Mr. Trump. Trump threatens that his shutdown will last for several months. This politically hostile environment is not good for the growth of the global economy and negatively affects the position of the equities and stock market.
Unnerved by the current geopolitical climate, investors are showing more interest in safe-haven assets like bullion. This has put spot gold on the path for its best performance in about 10 years.
Gold is widely seen by many investors as a hedge against potential threats from both political and economic sides. This is reflected in the holdings of SPDR Gold rising to their highest point since August, growing by about 6 percent since touching their lows in October,
Kedia Commodities, which is based in India, noted that the precious metal is testing resistance at $1,274.60, and if it manages to sustain this level, it will be able to push past $1,286.70 in the short term. At this rate, gold might just hit $1,300 in the coming year as more geopolitical unrest shakes up the economy.
The entire precious metals market is seen to be on an upwards trajectory, with silver gaining 0.8 percent to $14.84 for an ounce, platinum boosting by over 1.1 percent to $791.24. Even Palladium, which is a key component of many catalytic engines, went up by 0.7 percent to $1,255.35 for an ounce.
International interest in the bullion is also on the rise, with tempting promotion offers at Dubai’s Dubai Shopping Festival (DSF) where at least 33 kilos of gold, valued at over $1.4 million, will be given way to shoppers.
Meanwhile, shoppers in India are being lured by local jewelers to purchase gold for as little as one rupee (or one cent). Retailers are offering bite-sized portions online, once customers accumulate one gram of gold, they qualify for shipping.
India’s domestic jewelry market has been on the decline because of stringent government regulations and fading interest by the young and upstart millennial market.