While many leading stock indexes are hitting new records, the commodities market continues to show bullish peaks tempting many traders to invest in precious metals. Investors are closely interested in the dynamics of precious metals’ price evolution: silver, platinum, palladium and particularly gold. For years, no real trend concerning them was dominant. As a result of central banks’ accommodative policies, assets like gold and silver retain their “safe haven” status more than ever. Investing in assets that can retain their value in times of crisis has never been so popular. Most analysts consider precious metals as assets that it makes sense to include in your equity portfolio.
Factors Affecting Gold Trading in 2020
Confidence in fiat currencies deteriorated in 2020. The increase in the volume of global debt and the fear of a new financial crisis were why many are diversifying their portfolios by investing in gold and other safe-haven assets.
One of the most remarkable indicators of global consumption is the volume of gold used by jewellery. In fact, buying jewellery is a sign of good economic health. The advances in trade agreements between China and the United States showed that the Middle Kingdom matters maintain growth well at home.
The month of March 2020 will forever be etched in the history of financial markets. The stock market decline was more pronounced than in 2008. The carnage in the equity markets began in February, when the virus began to spread outside of China, particularly in Italy.
Gold, which had previously served as a safe haven, also fell sharply. The ounce returned to the late 2019 level of $ 1,500. The panic on the markets was such that certain automatisms were upset. Investors consistently buy precious metals in tough times. But this time, even these are sold for the benefit of cash.
The Price of Gold Carried by the Geopolitical Context
The yellow metal had its highest peak in six years. Admittedly, the monetary policy of low central bank rates boosted gold investment, and the geopolitical situation played a significant role, dominated by Sino-US tensions. The price of gold is also very dependent on the dollar’s parity.
Also, gold benefited from the uncertainties about the results of the US presidential election. The ounce gained 0.82% to 1895.40 dollars just before the election.
Gold is currently trading at $ 1,850 an ounce.
2020 was Exceptional for Trading Gold
For those who are thinking of integrating the noble metal into their savings and investment portfolios, it is interesting to know that the gold price trajectory was exceptional during the year 2020, starting from the second quarter. A fact that is even sufficiently striking in market finance for many news TV channels to devote a report to it.
In the middle of a health crisis due to covid 19, the metal star broke all records. Gold prices hit an all-time high of $ 2,075.47 an ounce in early August. And it probably hasn’t said his last word, even though the gold market has since consolidated.
After falling last week, gold rallied again, once again crossing the symbolic $ 2,000 an ounce mark. For experts, the yellow metal undoubtedly benefits from the dollar’s weakness on the foreign exchange market and seems set to continue its progression.
Warren Buffet understood this well and invested heavily in Barrick Gold, a gold group. The legend of investing, nicknamed the Oracle of Omaha, is traditionally known for his gold critics. And he’s just made a dramatic shift from banking – he sold off his stake in Goldman Sachs – in favour of a big profit-making gold mining giant.