The price of gold, a traditional safe haven in times of economic uncertainty, has taken a major hit in February 2020. 1550 is indeed a solid level, but the “distance” between there and 1500 is quite a long one. Right now, there’s too much uncertainty going around for a simple close under 1550 to prompt a sell-off.
Despite the ongoing spread of the coronavirus and concerns about its impact on the world economy, gold prices have not been rallying as expected. In fact, they have taken a sharp downturn in recent weeks, experiencing some of the largest swings in value in recent history.
The average price for gold in February 2020 was $ 1,556.48 an ounce. The lowest was $ 1,552.86 an ounce while the highest was $ 1,658.70 an ounce. Average gold price in 2020 was $1,773.73.
At the beginning of March, gold prices hit their highest levels in more than seven years, briefly trading above $1,700 an ounce. However, this strength was short-lived, and the market has taken a big hit in the following weeks. Currently, gold is trading at its worst level since mid-December and at a three-month low. This is in stark contrast to the seven-year high it hit just a couple of weeks prior. In January 2020, the price of gold hit a six-year high, briefly trading above 1600, driven by several factors. The first boost came from the US-Iran military actions and was followed by the outbreak of the coronavirus and its classification as a public health emergency. With investors seeking safe havens, the price of gold was driven higher. The US central bank, the Federal Reserve, maintained low interest rates which traditionally support precious metals like gold. The volatile end of the month for stock markets also benefited gold. In February, investors should watch for the high hit in early January at 1612, and potential gains towards 1700 an ounce.
Many investors are shunning all forms of risk and turning to cash as a safer option, which is having a negative impact on gold prices. There have also been reports of selling by those who bought gold on margin or those selling to cover losses made in other markets.
The recent interest rate cut from the US Federal Reserve, which is traditionally seen as a sign of a weaker dollar and therefore a positive for gold, has not had the expected impact. Gold initially gapped higher in Asian trade following the rate cut, but this strength was short-lived and the market has since taken a big hit.
Despite the current downturn in gold prices, some experts are viewing it as a potential opportunity. The most immediate level to watch is $1,445, which was the low from November and December of last year. A break below this level could see further downward momentum in the gold market.
In conclusion, while the current state of the gold market may be causing concern for investors, it may also present an opportunity for those willing to take the risk. As with any investment, it is important to do your research and carefully consider your options before making a decision.