6 factors pushed gold back to $ 1900 levels
A recent report from the Equity Group said that gold's performance has been exceptional since the end of March 2021, following its 9-month low of $ 1676 an ounce, and has since increased by more than 11% to its current levels above $ 1900. For the first time in four months.
The Equity Group report, which was assigned to the "vision", indicated that the main incentive for gold to cross the psychological barrier at $ 1900 an ounce is due to six factors: The weakness of the US dollar, which reached its lowest levels in four and a half months, which made the yellow metal cheaper for holders of other currencies. In addition to the decline in US bond yields near their lowest levels in two weeks, in addition to increasing concerns about inflation, following the US Federal Reserve’s stuck pessimistic tone regarding interest rates, and finally the collapses that occurred in the cryptocurrency market during the past week, and the return of concerns about the spread of Corona And its affiliates in India and other countries of the Middle East region, and the emergence of some deteriorating economic data.
In turn, the head of the research department at the Equity Group, Raed Khader, confirmed that gold is currently benefiting from the weakness in the US dollar and the risks of inflation that are increasing, especially in the United States and the United Kingdom, which made investors hedge against these risks, indicating that what will support gold More in the coming period, the Fed remains pessimistic, or in other words, its adherence to the very easing policy and keeping interest rates low in light of his view that the high inflation is only a result of temporary factors.
He explained that this rise that we are witnessing today and during that current period comes as a reaction to the recent consumption data, as gold has attracted some buying interests in light of it being an attractive way to hedge against inflation, so that the yellow metal interacts with the rise in inflation.
He pointed out that these factors also increased the basic personal consumption expenditures index by 0.4% in March, and the rise in inflation by 4.2% in April, pointing out that there is another thing that supported gold as a safe haven is the collapses that occurred in the cryptocurrency market during the past week.
He pointed out that one of the factors that supported gold after trading yesterday, is the drop in US consumer confidence in the month of May, as the consumer confidence index fell to 117.2 points from the revised reading for April at 117.5 points. The report pointed out that while consumers remain optimistic about the current state of the economy, they are not optimistic about the future.
He explained that there are anticipated data that will have a clear impact on the yellow metal in the coming period, which is an assessment of the improvement in the consumer index, which will raise a question about economic growth: Will it remain strong or not ?, which will be monitored tomorrow, Thursday, amid expectations that the initial reading will rise. Of the GDP at 6.5%.
He pointed out that from that data also, labor market data, which will appear at the beginning of the month to see the extent of its recovery following the disappointing numbers in April, in addition to the numbers of Coronavirus infections and the extent of countries' response to vaccines and their return to normal life after providing vaccines to their people.
He stressed that gold reserves play a vital role, as when central banks buy gold in larger quantities than they sell, this affects gold prices up, because the money supply increases and available gold becomes more scarce, and recent data indicates the growth of official global gold reserves.