The dollar hit the bottom 3 weeks and investors expected the US to launch a new stimulus package that made the gold price rise more than 30 USD an ounce.
Closing session 9/10, each ounce of spot world gold increased by nearly 37 USD to 1,938 USD. Prices have risen for 2 consecutive weeks with an increase of nearly 2% this week.
“Investors seem very optimistic about the possibility of the US stimulus package. This is really the main engine for the uptrend of gold prices,” said Eli Tesfaye – senior market strategist at RJO Futures. Increasing stimulus also means higher inflation risk. That gold is the traditional tool to hedging this risk.
The depreciation of the dollar will increase the price of precious metals. Amid strong technical gains, Tesfaye thinks gold may soon repeat August highs.
After halting talks with Democrats this week, US President Donald Trump urged Congress to pass a smaller stimulus package that includes support for the struggling aviation industry. Besides, Democratic candidate Joe Biden increasingly outstrips Trump in public opinion polls also increases the prospect of a stimulus package.
The dollar’s depreciation yesterday was also due to expectations that Biden would win, making gold cheaper for other currency holders. USD price yesterday dropped to the bottom 3 months compared to a basket of major currencies.
The fact that interest rates were maintained around 0% and central banks’ record loosening policies to ease the economic impact of the pandemic have caused gold to rise 26% this year.
Prices of other precious metals such as silver, platinum and palladium also went up yesterday. Silver is up 3.4% to $ 24.6 an ounce, platinum is up 2.7% to $ 885.5 and palladium is up 3.3% to $ 2,450.
Ha Thu (Reuters, Kitco)