But a correction may be around the corner
Gold prices have crossed an all-time high in international markets with a $30 leap. However, according to experts, profit-booking might be just around the corner and gold prices may take a correction.
Amid the COVID-19 pandemic and the US-China trade war, investors have been pouring money in gold, which has pushed the precious metal to its highest-ever price of $1,937 per ounce on Monday.
The price of gold keeps fluctuating in the international market as it absorbs the impact of different countries’ markets opening with a lag. When this report was published, gold was trading at $1,933.
The last time gold prices crossed the $1,900 mark was in September 2011 when it reached $1,921 per ounce.
The increase in international prices of gold will see the per tola price rising to around Rs121,500 – a change of around Rs2,800 since Friday, which is the last time the All Sindh Saraf Jewelers Association shared gold rates.
Rashid Ali, head of business development at HG Markets, says the reason behind this recent hike is the US-China trade war as well as aggravating diplomatic ties between the super powers. Both countries ordered the closure of each other’s consulates in Houston and Chengdu amid allegations of espionage last week.
Investors flocking to the safe-haven metal has been boosted by a weak dollar, which fell to its lowest level in over a year, and hopes that the Federal Reserve will set a policy that helps the economy recover from the impact of the COVID-19 pandemic. The bullion is considered a safe and secure place to invest, especially during times of crisis.
Meanwhile, Rays Commodities COO Adnan Agar says gold prices have been increasing and broke all-time records due to fears of a second wave of the coronavirus as cases increase in some countries.
The uneasy US elections later this year have also been increasing investors’ anxiety and these uncertain times have been pushing them towards secure investments such as gold. Agar thinks the tensions between the US and China is due to the upcoming election.
Meanwhile, negligible interest rates in major countries have also made gold all the more attractive to investors as they will not be getting much by putting their money in government securities.
But Agar thinks that profit-booking or profit-taking, which investors do by selling stocks like gold bullion when their prices go up, may just be around the corner.
He said that when gold prices move up by around $50, investors start to book profits and prices take a correction. Gold prices have broken their previous all-time high record. He expects them to soon be taking a correction and short-term prices may come down from that point.
But he added that the overall environment is favorable for gold and its prices may not be coming down anytime soon. In fact, they will continue to rise unless the uncertain times due to the coronavirus, US elections and struggling economies end.