Surging gold prices have been one of the main stories in the commodities sector. As precious metals continue to gain amidst heightened worries of an economic recession, gold prices recently broke the much anticipated $1,340 price range, which acted as a resistance level for the yellow metal.
On Friday, however, prices for gold didn’t stop rising and ended up breaking the $1,400 per ounce price barrier, a level not seen since September 2013.
Up around 10 percent since the beginning of the year, Gold prices have gained momentum thanks to a variety of factors, but the most recent has been the expectations of a rate cut from the Federal Reserve in the future.
This, in turn, ended up pushing the U.S. dollar lower, and gold tends to rally when the dollar becomes weaker as it’s easier for foreign gold buyers to purchase the precious metal when the dollar is cheaper.
“I don’t think you can be anything but bullish on gold in the near-term after this significant technical breakout,” said Colin Cieszynski, chief market strategist at SIA Wealth Management. “When central bankers start talking about the stimulus that is generally weak for currencies, and this sentiment doesn’t just shift overnight. That is why I think gold’s break out is particularly significant. It’s not on the news of the day; it’s because of the shift in monetary policy.”
Many have gone on to say that should gold break the $1,400 price range, this would open up the likely possibility of a further surge increase, with $1,500 and $1,600 per ounce being a realistic possibility in the weeks and months to come.
Scotiabank has gone on to state that the recent surge in the precious metal’s price could attract more buyers than when the price was in the $1,300 level. Particularly, the bank goes on to say that there is a fear of missing out (FOMO) risk, where investors expect gold to surge now that it’s reached a 6-year high and that a surge to $1,600, $1,700 or higher becomes likely.
Gold prices have recently reached $1,410.50, up 0.74 percent on the day and up 4.1 percent this week while showing no signs of slowing down. Citigroup went on to say earlier on Thursday that the enthusiasm shown by investors is justified, and that a surge to $1,600 an ounce in the 12 months has a high probability, according to Bloomberg.
Other tensions that have helped spur gold prices further are the Iran-U.S. tensions that have emerged over the past few days.
With President Trump having almost gone through with a military strike on the nation as retaliation for shooting down a military drone that came close to Iranian airspace, markets have reacted to the ever-increasing possibility of military conflict with fear.
With new sanctions levied against the nation, the tensions only add to existing worries regarding the U.S.-China negotiations, which have so far stalled as new tariffs have been imposed by both countries on each others’ exports.
At the moment, gold prices are expected to surge in the near future with speculators being particularly enthusiastic about the precious metal’s future.