Gold prices rose to a record high of $ 2,075 per ounce in August as investors sought assets to "shelter" safely in the wake of the Covid-19 epidemic devastating the economy. However, precious metals began to fall sharply after that.
In the morning session on September 24 (according to Vietnamese time) on Kitco, the spot world gold price at one point fell close to the threshold of $ 1,850 / ounce and then slightly increased to around $ 1,863 / ounce.
However, experts told Báo gold prices will rebound violently and set new records thanks to fluctuations related to the US presidential election in 2020. Citigroup forecasts precious metal prices could rise by more than 200 USD / ounce compared to the current level.
US political upheaval
"Despite the decline in the past few weeks, gold prices may still set a new record in the future. The main driver is the economic stimulus package from Europe and the US. The 2020 US presidential election also helps to boost. precious metal prices, "said Edward Moya, senior analyst at Oanda Forex Trading Company (USA), to Zing.
"The instability in the race to the White House will keep investors looking for gold. However, the leverage remains the main driver," he added.
The election polls show it seems that former US Vice President Joe Biden may beat Mr. Trump. However, if US President Donald Trump continues to close the gap, uncertainty will increase. Meanwhile, according to Moya, financial markets hate uncertainty, which helps drive safe "haven" cash into gold.
Investors yearn for certainty in times of political turmoil. Photo: Reuters.
According to CNN , investors believe that the most ideal scenario for the stock market is that one side wins completely convincing. According to a Hartford Funds survey of nearly 1,000 investors last month, 46% of people think the White House and the Republican-controlled Senate are the best for the market.
Brian Kraus, Head of Investment Advisory at Hartford Funds, said 32% of respondents think the market will perform best if Mr. Biden wins and Democrats take over the Senate. Only 22% of people believe that a division of power between the two is good for stock prices.
Investors only crave for certainty in times of political turmoil, Kraus said. That is why investors hope for a complete victory, whether for Mr. Biden or Mr. Trump.
According to him, the biggest risk to this election is not who is the winner, but the possibility that power is divided between Democrats and Republicans, leading to a long stalemate.
Set a new record?
Citigroup Financial Group commented that gold prices could set a new record before the end of the year due to the risks surrounding the US presidential election in November. Analysts, including Mr. Aakash Doshi, said that the uncertainty about the outcome could cause precious metal prices to rise more than $ 200 / ounce from current levels.
Citygroup’s forecasts show a growing concern among investors about the White House race between US President Donald Trump and Democratic rival Joe Biden.
The already unpredictable race has intensified further with Trump’s plan to quickly find a replacement for judge Ruth Bader Ginsburg in the US Supreme Court.
Experts believe that the price of gold is still up in the long term. Photo: Reuters.
"The election can be an unusual catalyst when gold prices are moving sideways or falling volatility at the end of the fourth quarter. Historically, there has been no pattern of precious metal prices fluctuating during and after the election. That is why we think the gold price will set a new record before the end of the year, "Citigroup said.
In addition to the election, Citigroup said that low interest rates also help support higher gold prices in the long term. The Group believes that gold is still in a bull cycle.
During a policy meeting on September 16, FED announced its decision to keep interest rates close to 0% until 2023. FED Chairman Jerome Powell also warned of a slow economic recovery and need more support. government assistance.
In addition, according to Mr. Moya of Oanda, in fact, the price of gold is still highly correlated with the stock market. "Finally, precious metal prices will recover when investors sell off stocks, money flows rush to gold. However, that only happens after the rise of the dollar ends," the expert at Oanda predicted.
