Another increase in new COVID-19 cases, the unprecedentedly loose monetary policy of central banks, financial stimulation from governments, falling US dollar – these factors may cause increases in prices of gold, silver, or bitcoin.
On Monday, 27 July 2020, the price of gold expressed in the US dollar reached its highest level ever. Today, before noon, an ounce of gold cost almost USD 1950, exceeding the 2011 peak of USD 1920. The political conflict between the United States and China also adds to the potential factors mentioned above, which may be beneficial for price increases. Over the weekend, the US authorities arrested a Chinese researcher at a San Francisco consulate accused of hiding her military connections.
Silver, in turn, rose by more than 30 percent in four weeks, reaching its highest level since 2013. It also seems that this metal may also be supported by the economic recovery in the industrial sector and the growing popularity of photovoltaics and batteries for electric vehicles, where silver is used.
The drop in the value of the American currency may also be not without significance. The dollar index fell on Monday for the sixth consecutive session, to 93.9 points. This is the lowest level since September 2018. The weakness of the dollar may also be due to fears of a slower economic recovery in the US and a possible dovish announcement by the Federal Reserve after the meeting this week. The States of Florida, Arizona, and Tennessee recorded new records on Sunday in terms of the number of new COVID-19 infections.
Also, Bitcoin price have revived, which exceeded $10,000 for the first time since the beginning of June. It seems that cryptocurrencies could also benefit from the current boom. Of these, Ethereum (ETH) is currently attracting the most attention, rising about 40 percent in 7 days.
This week, in addition to the announcement after the FED meeting, a new plan of government stimulus to counteract the economic effects of the second wave of COVID-19 may also be published. Thus, Americans may be preparing for another powerful monetary and fiscal stimulus, which cannot pass unnoticed by financial markets.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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