Late on Tuesday morning, August gold futures broke through $1,800 per ounce of gold. The gold price attained this level around 11:30 AM, but it lightly bounced around the $1,800 price level throughout the day. This level is a significant high for gold futures. The last time gold futures achieved this level was in September of 2011, making this breakout an 8.5 year high for the price of gold futures. The gold spot price was also not too far behind, trading in the $1,790s on the day.
Gold Price Today
The next high for gold futures is $1,920.70 per ounce. The 2011 all-time gold price high resulted from fears of a global recession that hinged on the European Union’s sovereign debt crisis. Currently, in 2020, the gold market is considered bullish from the trifecta of the global, financial, and health crisis. The gold price’s next objective is to reach and surpass the all-time September 2011 high. Spot gold price today was up to a high of $1796 per ounce, following quickly behind gold futures.
Additionally, gold equities do not yet reflect the current gold futures market. They will eventually, so if you are an investor, it is always better to plan on buying sooner rather than later. Investors have plenty of concerns about the future of the global economy at this moment. Therefore, the gold price today mirrors and responds to gold futures. The gold price today also responds to gold futures, and today it is slowly climbing to $1,800. Instead of gold being used as a safe-haven asset, it appears the reinvigorated demand is to hedge against inflation.
Current Events and the Impact on Gold
Gold is not a market that trades quietly against current events. More often than not, the gold price reacts to political and socioeconomic news. 2020 is not an uneventful year, and just as the pandemic rears its ugly head once again in the US, investors respond accordingly. Some of the current events that impact the gold price today are the flatlined interest rates, COVID-19 resurgence, inflation, and the US elections.
Real interest rates are currently at 0 for the foreseeable future. This makes gold far more appealing to investors than bonds. To clarify, government bonds support government spending. Seeing as governments internationally are massively building up debt and printing money, inflation becomes a high risk that almost seems inevitable. And, since gold carries its own value as a precious commodity, the gold price can move inversely with the dollar. This relationship makes it far less likely for gold to drop in value at this time. Therefore, it could be a good idea to keep an eye on inflation, weakening interest rates, and keep up to date with the gold price today.
Next on the radar as November approaches the horizon is the US election. As November draws nearer, investors begin to speculate about the future of the economy. Right now, Allegiance Gold’s CEO, Alex Ebkarian, predicts that gold will fall between $1800-$2000 before the outcome of the US election. If Biden wins the race and makes it into office, Allegiance Gold also forecasts the price of gold will top $2,000 because of uncertainties of a President Biden economy. Even further, Allegiance Gold also foresees gold reaching the staggering $3,000 per ounce price over the next 24 months.
Gold, COVID-19, and the US Dollar
Additionally, the stock market usually moves inverse to gold. Because COVID-19 is resurging in midwestern and southern US states, businesses are reimposing closures in accordance with government regulations. Fears for the economic shutdown, rising unemployment, and rising inflation all lead the stock market to drop and gold to rise.
However, at certain points this year the inverse relationship between gold and the dollar did not appear on par with history. In the beginning of quarantine, gold and the dollar were up. This was before the Fed committed to printing currency and flooding the economy with fiat. Gold was massively liquidated, but also gold’s demand remained high as mints, refineries, and mines shut down temporarily. Since then, most mints, refineries, and mines have reopened.
It is interesting to note that some professionals claim at this time that gold’s success thus far is not attributable to COVID-19. Allegiance Gold maintains that the success of gold “is not attributed to the pandemic. COVID-19 simply exasperated the underlying weaknesses as evident by the negative real interest rates and further weakening of the dollar.” Peter Spina of Goldseek.com also backed this up and stated that gold’s success is on the predicted trajectory that was established before the pandemic. It seems that what is backing up the gold price today is inflation fears, rising unemployment, and impending worries about the recession turning into a depression.
Silver and Platinum Today
As for other precious metals, it is worth noting that silver is also looking somewhat bullish at this time. It is even possible that silver could outperform gold in the near future. The next objective for silver is September silver futures closing above $18.20. Kitco projects that this will also take silver to $20. Because of the gold-to-silver ratio, silver will usually move in direct relation to gold. Therefore, the gold price today outbreak will also affect the silver price.
As for platinum, the confidence in this precious metal remains low. Predictions suggest that platinum will continue to break down during this crisis, despite soaring to over $2,000 in 2008. Back in 2008, the platinum price peaked in March driven by production concerns in South Africa. The platinum price settled soon after by November to approximately $774 per troy ounce and has traded mostly lower than gold since 2018.