At present, according to analysts, the commodity of gold will soon reach the price of US$ 1,800 per troy ounce. However, financial strategists state that its price could even reach US$ 2,000 per troy ounce. On 26 June 2020, at 7:22 am CET, investment gold traded at US$ 1,768.50 per troy ounce, with a daily decline of -0.12% of its price so far on the commodity market – COMEX.
The price of gold, unlike other commodities, but especially in contrast to the stock market development, recorded an increase in its price during the coronavirus crisis. According to technical analysis, investment gold has strengthened its price by +14.92% since the beginning of 2020, and in an annual comparison, the price of gold on the commodity market has increased by +22.51% over the past 52 weeks. According to investment strategists, the reduced exchange rate of the US dollar (USD) also contributed to the rise in the price of gold. Currently on 26 June at 7:31 am CET, the USD was seen at a price level of 97.33, with a daily decrease of -0.1% according to the US Dollar Currency Index (DXY).
For thousands of years, gold has been the largest store of value. At present, gold is undervalued because of large bubbles in asset markets and central banks continue to print money, which supports these bubbles. This is an unsustainable situation and when the bubbles burst, the price of gold rises. Gold is the ultimate store of value because it is the only globally accepted financial asset without counterparty risk and has retained its purchasing power throughout history. In the long run, the stability of the value of gold is unique.
Since 1971, the world has been on the “paper money” standard. However, banknotes are hardly used today. Digital books are mostly used as money. Whether in paper or digital form, money issued by governments is commonly referred to as fiat money. Because fiat currencies can be created indefinitely, their value decreases over time, and so the price of gold denominated in fiat money rises. In August 1971, when the last remnants of the gold standard were abandoned, the price of gold was US$ 41 per troy ounce. At the end of May 2020, the price of gold reached US$ 1,729 per troy ounce, which is roughly an increase of more than 42 times alias more than 4,200 percent. Investors regularly turn to gold when stock markets fall, causing the price of gold to rise. According to financial experts and strategists stocks and gold are often negatively correlated, but for investment purposes, gold is an excellent diversification.