Comm: Precious

(New York)

It took almost ten years, but gold finally just passed its nominal all-time high (set way back in 2011 during the European debt crisis). That is not a good sign for the market. Gold is rising because of increasing worries about a prolonged economic downturn caused by a renewed COVID second wave. Gold hit $1,944 per troy ounce today, cruising past its previous high of $1,921 per ounce. “Gold has finally come on to Main Street as an asset people actually need to have”, says the CEO of Sprott, a precious metals specialist.


FINSUM: Gold has been helped by fears over the economy, and the fact that rates are near zero, which flatters zero-yielding gold.

(New York)

Gold has been surging on the back of fears of rising tensions between the US and Iran. The metal just hit $1,600 per ounce, its highest level in almost seven years. However, what is going to drive gold once all of this fear calms down? Gold has been known to spike in times of fear, but the positive effect on its price usually fades quickly. What will really drive gold is the same thing that always does: Treasury yields and their outlook. Ever since the Crisis, the relationship between gold and Treasury yields has been pretty strong. When yields rise, gold falls.


FINSUM: We don’t see a lot of upward pressure on rates right now, which taken on its own might make one think gold has a solid path ahead of it.

(New York)

There have been two huge beneficiaries of the increased tensions with Iran in recent days: oil and gold. The shiny metal is now at its highest level since 2013 at almost $1,600 per ounce. The difference between the two is that gold seems likelier to stay elevated. Goldman Sachs argues oil would actually need a physical disruption to supply in order to stay elevated, while historically gold is likely to keep rising. According to the bank, “In contrast, history shows that under most outcomes gold will probably rally to well beyond current levels”, says Goldman’s head of commodities research.


FINSUM: Gold certainly has a longer runway than oil for staying high as its rise in prices has nothing to do with a possible supply disruption, which means one doesn’t need to materialize in order for prices to keep moving higher.

Page 1 of 2

Contact Us

Newsletter

Subscribe

Subscribe to our daily newsletter

Top
We use cookies to improve our website. By continuing to use this website, you are giving consent to cookies being used. More details…