The positive effects of a year end are seen hovering around the yellow metal at the beginning of 2018 too. Gold held a strong finishing in 2017, up by 13.5 percent according to World Gold Council. Gold’s annual gain was the largest since 2010, outperforming all major asset classes other than stocks.
Contributing to this gain was a
• Weaker U.S. dollar
• Stock indices hitting new highs
• And geopolitical instability
All of these combined created an atmosphere of geopolitical and economic uncertainty, thus benefiting gold.
The uncertainties haven’t seemed to calm down, and hence gold continues its rally in the first month of the year. Gold continued to gain some positive traction through the early European session and was seen hovering around 4-month tops touched last week.
The US Dollar sank to fresh three-year lows, below the 90.00 round figure mark and was seen benefiting dollar-denominated commodities - like gold.
Meanwhile in the U.S. some risk-aversion trade has eventually provided an additional boost to the precious metal's safe-haven appeal.
With the USD still struggling to gain any respite, the commodity seems all set to build on its bullish momentum and head back towards testing September 2017 highs
While we see gold touching monthly highs, we shouldn’t forget a concerning issues- What if markets collapse? Well, then it could suffer collateral damage as institutions and funds struggle for liquidity and have to sell good assets to stay afloat.
A similar situation had surfaced in 2008 when the stock market collapsed, but gold comparatively has recovered faster than equities and since then went to be its strongest bull market ever with prices rising to new heights of over $1900 an ounce
Now that god prices have reached $1350 an ounce, whether it stabilises there, rallies or gets pulled back--- depends on the U.S. dollar and Whether the U.S. market will allow it to stay there.
Contributing to this gain was a
• Weaker U.S. dollar
• Stock indices hitting new highs
• And geopolitical instability
All of these combined created an atmosphere of geopolitical and economic uncertainty, thus benefiting gold.
The uncertainties haven’t seemed to calm down, and hence gold continues its rally in the first month of the year. Gold continued to gain some positive traction through the early European session and was seen hovering around 4-month tops touched last week.
The US Dollar sank to fresh three-year lows, below the 90.00 round figure mark and was seen benefiting dollar-denominated commodities - like gold.
Meanwhile in the U.S. some risk-aversion trade has eventually provided an additional boost to the precious metal's safe-haven appeal.
With the USD still struggling to gain any respite, the commodity seems all set to build on its bullish momentum and head back towards testing September 2017 highs
While we see gold touching monthly highs, we shouldn’t forget a concerning issues- What if markets collapse? Well, then it could suffer collateral damage as institutions and funds struggle for liquidity and have to sell good assets to stay afloat.
A similar situation had surfaced in 2008 when the stock market collapsed, but gold comparatively has recovered faster than equities and since then went to be its strongest bull market ever with prices rising to new heights of over $1900 an ounce
Now that god prices have reached $1350 an ounce, whether it stabilises there, rallies or gets pulled back--- depends on the U.S. dollar and Whether the U.S. market will allow it to stay there.
No comments:
Post a Comment