Per oz of Gold Hit Record High

It’s a good day for metals. While the greenback struggles to keep its head above the water, spot gold is in a rollercoaster that is only going up. The USD continues to record poor yields, its lowest in over a year. 

The gold rate today surged by at least 30% from its price in the previous years. Spot gold reached its all-time high at $1,944.71 per oz of gold. This is above the previous price of $1,921 per oz from 2011. Similarly, gold futures reached $1,966.50 per oz of gold. They grabbed the seat of the prior record of $1,923.70 per oz in the same year. Silver follows the bullion’s trail at $24.3993 per oz, a new record high after a nearly seven years period.

Gold is a USD-based commodity. When the dollar is weak, the price of gold goes up. When the Fed releases monetary-easing measures in the form of stimulus packages to keep the economy going, this results in a weaker dollar and higher price per oz of gold. 

Washington targets to settle its second stimulus package, the CARES Act 2. This is before the Senate starts its August recess on August 7. Another $1 trillion stimulus money will be released with hopes to keep the US economy afloat.

Currently, the trade-weighted value of the USD has weak purchasing power against its trading partners. The higher purchasing power of trading partners’ currencies increases the demand for gold, and high demand results in higher prices. 

Eyes on the Price and Prize: $2,000 per oz of Gold Possible

As investors seek more stable refuge for their money, demand for gold has seen an unprecedented rise in the last six consecutive days.

COVID-19 cases in the United States continue to go up. The high fatality rate has now reached a thousand deaths per day. Adding to this is the heated geopolitical tension between the US and China, where diplomatic relations between the two biggest economies in the world reached a new low. 

The two countries ordered the closing of each other’s consulates in Houston and Chengdu, respectively. Scholars on international relations argue that severed ties may reach a “point of no return” and another Cold War is looming.

If tensions continue to persist, commodity analysts predict that a $2000 price mark an ounce for spot gold is not only possible but one that people should definitely expect. The question lies on if the momentum could still be carried to higher altitudes after hitting the $2000 mark.