Gold seeing a rebound to $2,000 on the back of a weakening dollar

Gold is seeing a rebound to $2,000 an ounce, as the American dollar continues its slump while investors count on the U.S. interest rates to stay lower for longer. The Gold could witness a momentum after the chairman of the Fed declared a more relaxed stance on inflation in the last week, with vice-chairman of Central bank indicating that the bank has rejected negative interest rates head of the bank’s next policy-setting meeting.

Read: Nigeria has gold reserves of about 200 million ounces – Prof. Osinbajo

Recently, the dollar dropped to a 2-year low, fueling wide progress in commodities in the market. Meanwhile, the spot gold gained over 3 per cent from the past three sessions, after the commodity’s first monthly loss was recorded since March this year, coupled with the support from the Fed’s new approach on inflation which came after a slow demand from gold-backed exchange raised the tension that the metal may be losing momentum from its key growth drivers.

Rhona O’Connell, head of market analysis for EMEA and Asia regions at StoneX Group Inc. said that the gold ingots are benefiting from the weakness of the dollar coupled with continued risk hedging and a contravene of the $2,000 mark will build up interest.

According to O’Connell, “For the longer-term, the persistent risks to the economic and financial environment, along with excess liquidity in the system, will underpin professional investment as cash looks for a home.”

Although, the bullion has soared by over 30 per cent hitting the highest ever earlier last month amidst huge stimulus aimed at revitalizing economies feeling the brunt of the pandemic, the rally in gold paused after an uptick in real rates as investors booked profit-taking deals and switching to riskier assets by the virtue of the fact that COVID-19 vaccines will emerge.

Here’s how: Nene Agboifo is changing the micro startup landscape, driving AONECRAFTBUSINESSHUB Handcrafted fashion Accessories for kings and queens to profitability against all odds

Meanwhile, Comex gold futures for December release topped $2,001.20 an ounce to becoming the highest since Aug. 19. The Spot gold rose 1.1 per cent to $1,989.68 an ounce on Tuesday in London, while Dollar Spot Index dipped 0.4 per cent to the lowest since May 2018.

Data from Bloomberg, however, revealed that on the equity traded funds last month, only about 1 million ounces of gold were added. This figure lagged behind the monthly average rise of 3.57 million ounces from January through July.

 

Leave a Reply