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Record gold prices 'could go higher'

Gold has soared through a record price this month and there are predictions it could go even higher over the next year as the effect of Covid-19 is felt around the world.

Wednesday, August 12th 2020, 5:00AM 1 Comment

The price of gold went past US$2,000 (NZ$3,009) an ounce for the first time earlier this month and is up more than 30% this year, although it had slipped to US$1,987 by Tuesday evening.

Gold is often used as a safe harbour during times of disruption and as a hedge against inflation. 

Chris Smith, general manager at CMC Markets, said both gold and silver prices were “due for a breather” because technical indicators had become stretched after nine weeks of gains.

“Gold started the year at $1,500 and momentum move and demand from investors has pushed it past the prior 2011 peak.”

He said unprecedented monetary and fiscal stimulus had boosted inflation expectations and created a “perfect scenario” for precious metals. Recent weakness in the US dollar had also pushed the price up. The drop in gold prices this week had been prompted in part by a reversal in that trend.

“As real rates move into negative territory it supports gold,” Smith said.

“Even Google issued a 10-year bond at 0.45% last week.”

But he said some forecasters were expecting further strength ahead and there were predictions it could top US$2,300 within the next 12 months.

Tags: gold

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Comments from our readers

On 13 August 2020 at 12:11 pm Davidvs said:
Happy to be made wiser by Gold aficionados, but this years Gold rally seems one of the unexpected and possibly irrational Covid derived speculative plays. Is this another 'Bitcoin' - maximum rise as it seeps into public awareness, sharp rise followed by a sharp fall? Outside the theory that inflation is going to take off what is the rational ground to support this rally? Or are present speculators reliant on the greater fool tenet characteristic of previous investment bubbles?

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