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  • Writer's pictureXtierra

Gold price makes history, hits all-time high and analysts still looking for more

(Kitco News) - The juggernaut that is the gold market remains unstoppable it started the week hitting an all-time high against the U.S. dollar.

The gold market made its historic move Sunday evening during the Asian trading session. First spot gold hit its all-time high above $1,920 and then August futures quickly followed suit. August gold last traded at $1,922.70 an ounce, up more than 1% on the day.

Although the record has been a significant target for analysts and investors, it is also seen by some as just a small speed bump within a much bigger uptrend.

In a recent interview with Kitco News, Marc Chandler, chief market strategist at Bannockburn Global Forex, said that he expects that gold prices could easily hit $2,000 an ounce before this current rally is over.

“It is difficult to talk about resistance in never-before-seen prices, but if our view of interest rates and the turn in the dollar cycle is fair, then $2,500 might not seem unreasonable,” he said in a report Sunday, reiterating his current bullish stance. The market has seen significant bullish momentum in the last few months as the global economy has been turned upside down because of the COVID-19 pandemic. According to some analysts, rising geopolitical tensions between China and the U.S. are adding further fuel to the rally.

Steven Dunn, head of exchange-traded products at Aberdeen Standard Investments, said that while gold’s rise above $1,900 an ounce has been dramatic, it is not surprising.

“The combination of escalating U.S.-China tensions and enduring fears about the economic impact of the coronavirus pandemic have provided plenty of fuel for this surge, and neither seem likely to dissipate in the near term,” he said in a statement to Kitco News. “As investors continue to face volatility and uncertainty, the appeal of safe-haven assets like gold and silver will only increase.”

In a recent interview with Kitco News, Afshin Nabavi, head of trading with MKS (Switzerland) SA described gold’s rally as a “one-way street higher.”

He added that the break above $1,900 an ounce was a signal that it was only a matter of time before the all-time highs were taken out.

“Everywhere you look, the world is a mess and that is going to drive gold prices higher,” he said.

Analysts have pointed out that because of the COVID-19 pandemic, central banks around the world have implemented aggressive monetary policy stimulus measures, pumping trillions of dollars to stabilize financial markets.

These stimulus measures have pushed bond yields significantly lower, a significant tailwind for gold.

“With real yields likely to remain low for some time, we now expect the gold price to remain elevated for the foreseeable future,” said commodity analyst at Capital Economics.

Analysts are also watching continued weakness in the U.S. dollar as another supportive factor for higher gold prices.

Daniel Pavilonis, senior commodities broker with RJO Futures gold continues to look attractive as the U.S. faces critical support at an important long-term trend line.

“We have printed so much money and there is so much risk on the table it is difficult to see how the U.S. dollar rallies from current levels,” he said.

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