Gold is heading towards an all-time high
Gold prices are trending sharply upwards, approaching the breakthrough of an important psychological barrier, heading to record a new all-time record high, in a global economic environment characterized by a lot of uncertainty and varying expectations.
Climb to the top
Gold prices rose on Monday to touch the level of 3489 dollars per ounce, in a bold move that brings it closer to breaking through its previous historical peak at 3500 dollars.
The technical landscape and supporting fundamental factors seem to be ready to complete this upward trajectory, as analysts expect prices to consolidate at these high levels before climbing back up again towards a new target of 3,600 dollars per ounce by the end of this year.
Basic ascent engines:
The precious metal is pushed forward by two main factors:
- Commercial uncertainty:
The trade negotiations between the United States and China are still a big mystery for investors, prompting them to look for a safe haven that preserves value like gold.
- Monetary policy forecasts:
US inflation data last week reinforced expectations that the Federal Reserve (the US central bank) will cut interest rates later this month, which reduces the cost of holding non-yielding gold.
The complexities of the political and judicial scene:
The political landscape in Washington adds other layers of complexity:
- The future of monetary policy:
The fate of Lisa Cook, one of the Fed governors, is still pending after her impeachment hearing, which creates some uncertainty about the central bank's future directions.
- Customs duties and their future:
In an important development, a federal appeals court ruled that the global tariffs imposed by former President Trump were imposed illegally, upholding an earlier ruling of the international trade court.
However, the court allowed the imposition of these fees to continue until the middle of next October, to give Biden a deadline to appeal to the Supreme Court, prolonging the uncertainty.
A look at the future:
Analysts point out that the breakthrough of gold to new record levels requires a strong stimulus, which may be an aggravation of trade negotiations or weak US economic data that further support the Fed's direction towards monetary easing.
The focus this week will be on a package of US labor market data, including jobs, the ADP Employment Index, and the non-farm payrolls report (NFP), which will be a real touchstone for the strength of the US economy and will directly affect the Fed's decisions and then on gold prices.
In the end, gold seems to be on a strong upward trajectory, supported by an environment of possible interest rate cuts and a lack of clarity in the global trading landscape, making it the preferred haven for investors looking for safety.
