Gold on the rise again

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Thanks to the increased interest of investors, during the 49th week of 2020, the price of investment gold rose on the commodity market. The price bounced back to over US$ 1,800 per troy ounce and on 3 December gold continued to be in the bull market. On 3 December at 8:47 am CET the investment gold traded on the Commodities Exchange Centre (COMEX) at US$ 1,841.4 per troy ounce with a daily gain of +0,612%.

According to economic correspondents, the previous decline in the price of investment gold on commodity markets was caused by gold divestments, with current supply on the market exceeding demand. This was caused mainly by large central banks, which released – from their physical deposit – a relatively larger volume of gold reserves than the usual amount of these divestments in the previous period. According to these experts, another significant factor leading to a reduction in the price of gold was the fact that investors were less interested in trading investment gold, and allocated their free funds on the stock market. Another important factor leading to the price of gold dropping was diminished investor appetite in investment gold. Instead investors allocated their available funds onto the stock market, where due to high positive volatility a high returns on investment occured.

However, the stock market situation changed this week and for example the growth rate of the US stock market slowed more significantly as evidenced by the results of major US stock indices. On Wednesday, 2 December the selective stock index DJIA added only +0,20% more points and another index – NASDAQ even showed a loss of –0,05% points compared to the previous day. At the same time a broad-based index S&P increased its point value by only + 0,18% points. In comparison, in the 47th and 48th week, these indices showed several percentage daily increases in their point values.

Based on this situation, when analysts expect the beginning of a decline in European stock prices on the European stock market and a decrease in the point stock of major European stock indices, especially the German DAX index or London FTSE, investors have resorted back to trading investment gold. Due to the increased demand, the value of this precious metal has increased and continues to maintain the business trend of the bull market. Another factor, according to commodity market financial strategists, is the so-called inverse rule in relation to the price of gold and the exchange value of the US dollar (USD), which is the main commodity currency. According to the DXY dollar index the USD exchange value continues to decline and on 3 December at 9:25 am CET the USD was seen at a price level of 90.89 with a daily decrease of –0,24 %.

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