Gold prices reclaim $1,900
Friday, October 30th 2020
Gold prices had started to fall thanks to the early signs of recovery that the economy had started to show. However, in the face of fresh possible adversity and amidst new concerns, gold prices once again crept past the $1,900 mark to finish on a two-week high.
This rise comes in the face of investors being wary of the recent economic recovery reaching a stalling point. While the number of people applying for jobless benefits fell to 873,000 which is the lowest number since this ordeal began, the actual count is being suggested to be close to one-and-a-half-million. Another big reason for the reticence on the part of the investors is the fact that all the efforts to boost the economy, as had been predicted, have only worked in the short-term and their efficacy is starting to wane.
The all-important presidential elections have also added another element of uncertainty. It is being predicted that the loser won’t concede defeat immediately and that can lead to a state of precariousness in the world of politics which will have a big negative impact on the economic world. Gold prices began to rise because it was seen as a safe hedge against all the uncertainty that the pandemic introduced. Now, with all signs pointing towards an increase in the unpredictability, this price is expected to rise further.
Presidential elections fall under the category of a major-risk event for the financial world and this election with all the additional events surrounding it is expected to be more so. As alluded to earlier, the strong possibility of needing to wait a little longer to get a proper outcome is making investors, especially the international ones, quite nervous and this will lead to the dollar weakening further. This in turn will hasten foreign buyers to buy dollar-priced gold which will increase its demand further pushing the price.
However, analysts are also erring on the side of caution as the precious metal market isn’t as bullish as some trends might be suggesting. These analysts are taking the poor performance of September as an example to suggest that things could go on a downward trend quite quickly. This becomes even clearer when looking at the prices of other precious metals. Platinum, Palladium, and Copper have all experienced a slump in their value in comparison to the end of last year and the beginning of this year.
If the election does produce an undisputed outcome on the 3rd of November, that could also act as a deterrent to further increase in the price of gold. A lot will depend on how all these different elements play out over the coming days. Despite this, the overall uncertainty in the market hasn’t subsided and that still makes gold one of the safest investment options especially in light of the fact that the central banks have been forced to adopt a low-interest rate policy. This is further reaffirmed by the lack of any tangible progress being made in the public health sector.