Gold prices above US$2,000/oz: where next?
Gold prices continue to rise, as uncertainty continues to plague global markets.
On late Tuesday, gold broke above the US$2,000 per ounce price level – a first for the precious metal. At the time of writing, gold continued to trade confidently above that level – with Spot Gold trading at US$2,043.15 per ounce, according to Bloomberg. The December Comex gold futures contract sat a shade above that, at US$2,055.60 per ounce, also according to Bloomberg.
‘The action kicked off in early NY trading, the prospect of further US stimulus is putting pressure on the greenback and treasury yields which provided the catalyst for the rise,’ S&P Global Platts noted, quoting analysts from MKS PAMP.
Besides gold, silver has also performed strongly in recent times, with the September Comex silver futures contract trading above US$27 per ounce – substantially off its 52-week low of US$11.76 per ounce, according to Bloomberg.
A month of uncertainty unearths gold bulls
Gold has been on a tear over the last month, rising ~13% in that period. This comes as uncertainty over the long and short-term economic and health impacts of the coronavirus pandemic continue to circle. Further out, in the last six months, the precious metal is up approximately 30%, outpacing the performance of a number of key global stock market benchmarks, including the Dow Jones Industrial Average, the S&P 500, the British FTSE 100, the Australian ASX 200 and the German DAX.
Though key equity markets remain subdued, gold miners and producers – particularly from Australia and Canada – have seen their share prices appreciate significantly in the last month off the back of the precious metal’s rally.
In that time period Canadian-focused miners such as Agnico Eagle Mines Limited (AEM) has seen its share price rise 30%, Barrick Gold Corporation (0R22) has added 11%, and Kinross Gold Corporation (K) has climbed 35%. In Australia, large-cap gold miners have also performed strongly over the last month, with the Newcrest Mining (NCM) share price up 13.86% and Northern Star Resources (NST) rising close to 20%.
Gold price: where next, the analyst view
Off the back of this rally in the precious metal, analysts from RBC Capital Markets said:
‘Gold has settled at its highest levels ever, and the message is clear: gold positioning indicates that investors’ attitudes toward the metal have changed amid the public health crisis, economic turbulence, and extremely easy monetary policy actions.’
As a result of this, and looking forward, the investment bank’s analysts noted that:
‘We have moved our previous middle/base case to our low scenario, moved our previous high scenario to the middle/base, and launched a new high scenario where gold crosses the $3,000/oz level assuming the current situation deteriorates materially.’
At spot gold’s current price levels, that high scenario implies upside potential of around 47% for the precious metal.
As we discuss in more depth here, Goldman Sachs recently raised their price target on gold to US$2,300 per ounce.
How to trade gold and gold stocks
Where do you stand: do you think gold will run higher or fall from here? Wherever you stand, you can use CFDs to trade both rising and falling markets, through IG’s world-class trading platform now.
For example, to buy (long) or sell (short) Spot Gold using CFDs, follow these easy steps:
- Create an IG Trading Account or log in to your existing account
- Enter ‘GOL’ in the search bar and select it
- Choose your position size
- Click on ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade
Speculate on commodities
Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1
- Wide range of popular and niche metals, energies and softs
- Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
- View continuous charting, backdated for up to five years
Live prices on most popular markets