Over the last two days, the US dollar has been getting firm. At the same time, gold has seen three consecutive higher closes compared to the openings of that day.
Spot or physical gold settled at $1709.10, which is a net increase of about seven dollars on the day. June futures increased $2.40 or 0.14% and fixed at $1715.60.
It is worthy of mentioning that the range between physical gold and gold futures has narrowed to roughly seven dollars.
Today’s net gain was softened by dollar strength, which took away $4.60 of gold’s value per ounce.
One of the most prominent precious metals companies is warning investors that the gold market could have climaxed in the near term.
Heraeus Precious Metals reported on Tuesday that there are technical signs that the yellow metal is running out of momentum.
Also, analysts think that analysts said that speculative interest in the precious metal market is looking a little crowded. When the speculative net long position reached its record the last time, the gold price dropped by 18% over the next five months.
Heraeus Precious Metals mentioned that plenty of bad news had been priced into financial markets. Some countries begin to ease restrictions of the lockdown. It would support optimism and result in dulling some of gold’s safe-haven luster. It could pull back the prices of the precious metal.
The gold market appears to have peaked in the near term. However, analysts still see plenty of upside for the metal in the long-term.
Analysts said interest rates close to zero support gold by keeping real rates in negative territory. They also see escalating geopolitical risks favor gold prices after the summer depression ends.
The presidential race is now looking very different after Trump’s eccentric handling of the Coronavirus pandemic. Political uncertainty is bullish for precious metals.
Unlike gold, analysts don’t think silver fortunes improve any time soon.
Joe Foster, portfolio manager at VanEck, said that gold prices could reach new record highs by next year. He thinks that precious metal prices could touch $2,000 within twelve months. It is because of the reaction to massive stimulus measures taken to protect the global economy from the coronavirus crisis.
Foster says that the world is going into recession. It’s not apparent how deep it will be and how long it will last. Debt is increasing to raise funds to get through the crisis. The market is full of uncertainty, stated Foster. With interest rates closer to zero and even negative in Japan and Europe, gold prices are expected to push higher. Foster claimed that investors should keep an eye on mining stocks since it is one of the few sectors that is seeing increasing commodity prices. He added that a lot of the significant producers are financially in good condition.
According to Foster, two companies increased their dividends amid the crisis, and more companies are expected to continue growing dividends once all the mines are back online.
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