Gold Gains 16% with an 8 – Year High: Why It Will Continue to Rise

A day before, XAUUSD ended its 4-day winning run with a total of 2.6% gain before closing at $1769. It is currently trading above the $1760 mark per ounce and made almost 16% gain this year to date.

Gold is a highly valuable commodity. It tends to perform opposite stocks and bonds. Because the value of gold holds well, investors consider it a safe-haven, especially during turbulent economies. In the coronavirus crises, gold is a shiny asset that will likely soar in price in the coming weeks. Here are the reasons why.

The global markets experienced severe declines early this year due to the COVID-19 outbreak. As fear creeps out on the second wave of coronavirus infections in different countries, risk-averse assets like gold are attracting more investors. South Korea is now experiencing what seems to be a second wave of coronavirus. Central banks around the globe have already cut interest rates to ease economic struggles.

Economists worry that there will be more debt and more money circulating. Interest rates and gold correlates negatively. To date, countries with rising infection cases are Iran, Algeria, Israel, and the USA. Confirmed coronavirus cases are now around 10 million, with nearly 500,000 deaths.

The US is likely to force tariffs on $3.1 billion worth of UK and EU imports with duties of up to 100%. Although the new tariffs rule is open to public comment until July 26, it is a huge deterrent should it roll out, resulting in investors slowly walking away from risky assets. Included products are chocolate, beer, gin, olives, coffee, and some trucks and machinery.

Last January, US President Donald Trump and Chinese Vice Premier Liu He agreed to cut some US tariffs on goods from China on terms that China will purchase more farm, energy, and goods from America, along with sorting out intellectual property issues. However, the coronavirus made this phase-one deal unstable. China’s Global Times even alleged that the US is hurting the deal and treating Huawei negatively. The heating US–China trade war contributed to the rising interest in gold, pushing its price further up.