Kyle Quindo
Blackbull Markets Limited
Like Tesla, Gold has had a legendary 2020. Gold reached all-time highs just shy of that $2,080/Oz mark before retracing in the latter part of 2020.
Gold ETF’s Ballooned to over $550 Billion inflows, to the point where Gold ETF managers had nowhere to store the Gold they purchased for the ETF’s.
-637460816974502887.png)
Gold peaking around $2,080 before retracing off its all time high
With Gold at around the $1,850/Oz mark, investors and traders wonder what has happened to Gold and its future holds.
Gold did what Gold does best
I believe it is quite simple – Gold did its job, and it did it well. Last year, Gold bolstered one of its essential characteristics: to be a Safe Haven. The first half of the year saw unpreceded and widespread lockdowns amidst a recessionary period across the world. Stock markets plunge, and bond yields tightened.
Gold rose as the first half of 2020 got worse
And, of course, Gold prices rose. As the Coronavirus worsened throughout the year, with second waves and uncertainty when the vaccine was going to come, the price rose even more. However, as things started to ease up around the world, with a vaccine in sight, Gold pulled back. Uncertainty turned into some certainty. Risk-on was back, and Gold was left to be.
Gold is best when it is believed to be a safe haven, not a speculatory asset
Hindsight is 20/20, and it’s easy to say now that Gold’s price fluctuations were due to this. I would be first to say my prediction of Gold was incorrect. However, this gives us information about how Gold may react in the future.
While Gold was at its all-time highs, the world “valuation” started creeping into analysts’ mouths when talking about Gold and its price; a word which I believe should not be associated with any safe-haven whatsoever, and a word which I think is a good indicator as to when to sell your safe haven asset. There should be no hesitation when switching from risk on to safe-haven assets due to the possibility that the safe-haven asset is “overvalued.”
Inflationary periods are being discounted
With 2021 traveling full steam ahead, amidst Capitol riots, possible impeachment hearings, and increasing Coronavirus cases in America, Gold has settled around the $1,850/Oz mark. Many analysts predict an inflationary period in the US Economy will bolster Gold’s price, which still may highly be a possibility.
However, Margaret Yang, a strategist in DailyFX, believes that the market discounted inflationary pressures, and “that means the selloff in Gold could be temporary, and the downside may be cushioned by fresh stimulus to be announced by Biden.”
What do you think the future holds for Gold?
Risk Warning: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial adviser if you have any questions or concerns as to how a loss would affect your lifestyle.
Recommended Content
Editors’ Picks
EUR/USD retreats below 1.0700 after US GDP data
EUR/USD came under modest bearish pressure and retreated below 1.0700. Although the US data showed that the economy grew at a softer pace than expected in Q1, strong inflation-related details provided a boost to the USD.
GBP/USD declines below 1.2500 as USD rebounds
GBP/USD declined below 1.2500 and erased the majority of its daily gains with the immediate reaction to the US GDP report. The US economy expanded at a softer pace than expected in Q1 but the price deflator jumped to 3.4% from 1.8%.
Gold drops below $2,320 as US yields shoot higher
Gold lost its traction and turned negative on the day below $2,320 in the American session on Thursday. The benchmark 10-year US Treasury bond yield is up more than 1% on the day above 4.7% after US GDP report, weighing on XAU/USD.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.