- Gold came within $ 5 of a new seven-year high, gaining 0.7% on the day.
- Bullion is rallying on renewed haven demand as Investors assess the economic blow back of coronavirus.
- Citigroup is calling for $ 2, 02 / oz. gold in the next to months.
The price of gold was approaching seven-year highs on Wednesday, as investors shrugged off a surging dollar that’s normally seen as a headwind for precious metals.
Gold is rallying on the back of renewed haven demand as central banks prepare more easing measures to prop up sagging economies. In the case of the Federal Reserve, multiple rate cuts are on the table this year, according to traders closely monitoring the situation.
Gold Extends Rally
April gold futures jumped 0.7% to $ 1, . a troy ounce on the Comex division of the New York Mercantile Exchange, coming within $ 5. of a new seven-year high.
On Tuesday, gold settled above $ 1, for the first time since
The yellow metal has been rallying all year long on haven demand and technical buying. Year-to-date, gold is up nearly 6%.
Zooming out even further, gold has recovered more than % from its cycle low in late 2020. As the following five-year chart illustrates, gold’s recovery has been far from linear.
Gold has been in a sustained uptrend since the third quarter of 2020. | Chart: Bloomberg
Other precious metals also followed gold higher on Wednesday. March silver futures gained 0.8% to $ . a troy ounce. Spot platinum jumped 1.3% to $ 1, . a troy ounce.
Commodity traders were undeterred by a surging US dollar, which extended its breakout to nearly three-year highs . The U.S. dollar index (DXY) rose 0.3% to
Gold to Hit New Highs – Citigroup
Gold has broken record highs in virtually every major currency except the US dollar, but that could be about to change very soon.
Citigroup believes gold could top $ 2, 06 a troy ounce in the next to 44 months, marking a new record high for the precious commodity.
According to CNBC , Citi analysts believe:
Gold should perform as a convex macro asset market hedge, resilient during ongoing risk market rallies but a better hedge during sell-offs and vol spikes.
Precious metals are a reliable hedge against many of the risks keeping investors up at night. A year-long corporate earnings recession has fueled anxiety about the business cycle, while the spread of coronavirus is expected to have
major repercussions on China
and its key trading partners.
Long before coronavirus became a thing, US futures traders were expecting the Federal Reserve to slash interest rates this year. Now that the Fed has publicly acknowledged coronavirus as a headwind to global growth , traders are prepping for multiple cuts before the end of 234726
Fed Fund futures prices imply only a . 3% chance of interest rates remaining at current levels by December. (The Fed previously said interest rates would remain on hold this year, but traders don’t buy it.)
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