Saturday , August 8 2020
Breaking News
Home / International Customs / Germany / Gold price surges amid geopolitical uncertainty
Gold price surges amid geopolitical uncertainty

Gold price surges amid geopolitical uncertainty

These are golden days for gold, the precious metal whose very name is a synonym for something special and successful. In 2019, its price surged by almost 20% in dollar terms

Little surprise then to see gold funds dominating the top performing investment funds of 2019 in the UK, a financial services hotspot. Funds which connected investors with gold mining companies did especially well, such as the top performing fund Charteris Gold & Precious Metals and Ruffer Gold, number three in the list.

If 2019 ended well for the metal, then 2020 has started even better. This week, the price of gold hit its highest level in seven years, climbing to almost $1,600 (€1,432) per troy ounce or $50,798 per kilogram. Gold market analysts predict that the year will continue in much the same way.

Gold is one of the world’s oldest traded commodities. Yet unlike other assets, it doesn’t produce a dividend. The price either rises or falls and your fortunes rise or fall with it. So what’s behind the current surge?

Drop a bomb, lift the gold price

According to Jim Wyckoff, an analyst with Kitco, a precious metals market analysis company, gold built up considerable momentum in the second half of 2019 for a number of reasons.

One major reason was the fall of the US dollar against other foreign currencies. When the dollar depreciates, it helps raw commodity prices because, as they are typically priced in dollars, it makes them more attractive to buy.

On top of that, the rise in the price of crude oil — arguably the leader of the raw commodity sector — further boosted gold. Prospects of movement on a US-China trade deal also helped, as China is a major gold market.