Gold Surges pass $1,875, Growing Concerns on Global Geopolitical Risks

Olumide Adesina
Published: Jul 23, 2020, 12:39 GMT+00:00

Gold price soared higher at London’s trading session on Thursday. Gold traders increased their bullish bets as global geopolitical risk strengthens coupled with massive stimulus packages coming to an already bloated financial system. Gold is just about 3% from hitting $1,920 recorded in September 2001.

Gold, Silver, Platinum, Palladium

Gold futures gained about 0.15% to trade at $1,877.85, 01.01 pm GMT, hitting as high as $1,888 in its intraday trading session

For gold it’s the same old story: Interest rates in emerged market are close to zero and still grinding lower the levels it was during 2008 global financial crisis.

Ultra low-interest rates amid quantitative easing policies boosted the appeal of non-interest-bearing assets like precious metals because they can be used to hedge against inflation. The recent surge in gold has also helped the yellow metal’s holdings in exchange-traded funds to all-time highs.

Gold traders’ latest gas is coming on the basis that the relationship between the world’s biggest economies has worsened, as the U.S State department ordered the closure of China’s consulate in Texas, growing concerns that tension between the U.S and China could escalate further. Global investors dumped a significant amount of shares at Asia’s trading session and flocked to precious metals.

Normally the yellow metal performs well with US-China tension take center stage.

While the precious metal continues to fly higher after recent headlines on global Covid-19 caseloads reached 15 million, gold could hit the $2,000 price level within few weeks, as more stimulus hits global financial markets.

Looking at the price of gold in a cautionary perspective, positive macros coming from COVID-19 vaccines development will most like weaken the rally of gold, driving the price back to 1825 level in the short term. However, with gold presently trading at nine-year highs above $1,875, the bulls seem to have the upper hand.

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About the Author

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. He is a Member of the Chartered Financial Analyst Society.

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