Gold Reaches $2,000 Per Ounce For The First Time

The price of gold reached a historic high on Wednesday, exchanging at $2,040 per ounce XAU= in early trading. This overnight surge puts the overall rise in gold prices this year alone at over 30%.

Gold has been boosted throughout 2020 by a mix of factors, including the weakening value of the US dollar and increasing uncertainty in the markets which influences investor decisions, especially as COVID-19 pandemic continues to push countries further into recession.

Giles Coghlan, Chief Currency Analyst at HYCM, explaining the reason for the surge in gold prices, cited investor uncertainty: “we know that investors rally to gold in times of uncertainty. The reason for this is simple – gold is a safe haven asset that is able to maintain, and indeed increase, its value during volatile periods.”

Precious metals shine brighter as demand rises and dollars takes downward dive

Analyzing the issue further, Coghlan commented: “Investors and wealth managers have been buying up gold due to their concerns over the global economy’s ability to effectively recover from the COVID-19 pandemic. The fact that private banks are encouraging their clients to buy gold as a means of hedging against inflation and currency fluctuations shows that the market is not confident that we have witnessed the end of the coronavirus outbreak.”

Experts have advised that investors eyeing gold now need to be aware of the Volatility Index, which provides a 30-day projection of the volatility likely to be experienced by major gold markets. Monitoring this index helps because a fall in the VIX is usually followed by a rise in gold prices, and vice versa.

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