The price of gold is looking to consolidate around the $2,000 mark after showing a bearish pattern in the recent days. The precious metal closed Wednesday at $1,895 per ounce.
By press time, gold was trading at $1,857, a surge of 16.42% from the $1,595 price recorded at the start of the year. In a year marked with global economic uncertainty, gold attained its all-time high early August at $2,070.
The surge in price correlated with a period when gold’s status as an alternative source of wealth was tested.
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According to Bloomberg Intelligence Senior Commodity strategist Mike McGlone, current Gold prices are facing the same bull run about two decades ago. He notes that:
“Technical Outlook: Gold is more like a consolidating bull than topping out around $2,000. The metal is in a similar condition as the inception of 2001’s bull run. An extended period of under performance indicates firmer underpinnings than in the aftermath of the financial crisis.”
The key driver of the gold right has been the dollar. This week the U.S. currency strengthened thanks to the fading hopes of more stimulus from the U.S. The development was largely expected to suppress gold prices.
Currently, the support zone of the psychological point at $1,900 has helped to hold support in Gold for more than a month. On Monday, gold experienced a sell-off but action from buyers brought the price back. Currently, sellers are swinging with a bit more aggression, and price action is gearing towards the $2,000 level.
Factors propelling gold to new highs
The recent bullish run of gold might push the metal price higher and experts believe that the value will remain high for some time than expected. Currently, the environment is more than favorable for the metal’s price surge. Notably, the negative real interest rates and global uncertainties, like the November U.S. presidential election, are among the reasons that have pushed investors to build up their gold holdings.
Gold is also a perfect portfolio diversifier. Investors have been putting the focus on bonds and real estate investment trusts. Many, therefore, turn to gold for diversification.
Although gold has acted as a hedge for decades, if the price movement does not favor investors, cryptocurrencies specifically Bitcoin are seen as an alternative. As the crypto market continues to mature, Bitcoin is heading towards becoming a lucrative portfolio diversifier.