Investors are still concerned about 31 October, 2019 which is still the valid deadline for the departure of the United Kingdom of Great Britain and Northern Ireland from the European Union (EU), also known as Brexit. As the date approaches, investors’ nervousness is rising due to the unclear circumstances of the UK’s departure from the EU. Many investors, despite indications of a possible successful resolution of Brexit, resort to gold which is considered a relatively safe haven for their investments.
On 16 October, 2019, at 8:24 am CET, gold futures traded at US$ 1,484.40 per troy ounce, with a daily appreciation of + 0 . 06% of its price at Commodities Exchange Center (COMEX). There was a change in the business trend, from the bear market to the current bull market due to the pressure from rising gold demand. However, according to analysts, the development of the gold price still shows signs of stronger volatility and therefore it is not possible to talk about the sustained growth, these experts add. According to a technical analysis, the price of gold, in annual comparison, has recorded an overall increase of more than 17% of its price over the last 52 weeks.
On Wednesday 16 October, 2019 the price of gold rose after having lost almost 1% of its price on previous trading days. As already mentioned, the current rise in the price of gold reacts to investors’ concerns, when it is not clear whether the UK could avoid postponing its departure from the EU set for 31 October, 2019. The last talks between Britain and the EU regarding Brexit took place on Tuesday around midnight, but it is still unclear whether London could avoid postponing its departure from the EU. This happened before the two-day summit of EU member states, which will be held this week and starts on Thursday, 17 October 2019. Media reports, citing EU officials, stated that the negotiators were said to be close to a Brexit agreement, which triggered a change in the stock market trend on the late afternoon on Tuesday, 15 October, 2019.
Another traditional factor affecting the price of gold is the exchange value of the US dollar (USD) as a key commodity currency, where, according to economic rules, the price of gold and the exchange value of the USD behave mutually inversely. On 16 October, 2019, at 8:55 am CET, the US Dollar Currency Index (DXY), which compares the US dollar exchange rate against the other six major world currencies, was at 98.25 level with a daily decrease of – 0.04%. According to financial strategists, the trade relations of the two largest economies in the world, namely the US-China trade war, have been a long-term factor affecting the price of gold.
While investors’ uncertainties have been partially dispelled in recent days, US central bankers themselves are not convinced that the current development of US-China negotiations is sufficient to avert the consequences and risks stemming from the long-lasting dismal relationship between the United States and China. Last week the reports of the so-called “Phase 1” trade agreement between the United States and China, as it was called by US President Donald Trump himself, encouraged markets, but the lack of details around the agreement has currently curbed this enthusiasm. Based on this, broker analysts believe that investors’ interest in gold will increase and financial strategists expect the price of gold to increase above US$ 1,500 per troy ounce in a very short-term investment horizon.
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