Bullish momentum in price of gold due to bearish US outlook

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Golden FX Link Capital business manager Long Samnang

The price of gold has spiked over the past few weeks to break the previous record high set in 2011 of $1,921 per ounce, with the current price above $2,000 as of Wednesday.

Despite this unprecedented surge in gold, the US economy is being further hurt by the continuing impact of the global coronavirus crisis causing the value of its currency to depreciate, with the Republican party of President Donald Trump implementing economic stimulus strategies in the run-up to this year’s presidential election.

 

Globally, based on the fluctuation of currencies, precious metals, crude oil, stock indexes and other investment products, value opportunities in derivatives trading have been observed by both new and experienced investors to reap healthy returns during this difficult time.

As we see in the news every day, the Covid-19 pandemic has hit countries’ business activities, especially in the key revenue-generating sectors.

For instance, the US – the country worst hit by the Covid-19 outbreak – has shown a dramatic decline in economic performance based on latest indicators.

Recently, US second quarter GDP has dropped by 32.9 per cent on the previous period. Moreover, the production of crude oil has declined since June by two million to around 10 million barrels per day, compared to April when production was 12 million barrels.

In response, the US government has implemented a policy of economic stimulus through the purchasing of treasury and real estate bonds in order to rebound the economy.

And with the US presidential election set for November, both the Republican and Democrat parties are discussing​​​​ further economic stimulus plans through the above-mentioned strategy to the amount of $2.2 trillion.

 

while the value of the US dollar will continue to drop, gold will maintain bullish momentum within the range of $2,000 to $2,100 per ounce.