At the moment XAUUSD is trading at $2030.75. Sky’s the limit now for gold maximalists. There’s no doubt that gold is still considered a haven in times of economic turmoil caused by the pandemic.
XAUUSD approached the 2K resistance back in 2011, but bounced off and dropped to $1045 in 2015. Soaring over $2000 proves that gold may play an important part in the global monetary system. You can follow the history of gold prices on the one-month chart above.
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Pandemic drives the prices
Cash flows to gold as Covid-19 fears rise globally. Additionally, global GDP growth is threatened by the growing tensions between the US and China.
Silver is also gaining. XAGUSD is up almost 40% in just two weeks.
As for gold, the price has already increased by 30% this year. There’s no hard cap on the value of gold, however big players, such as central banks can make any move, including dumping their reserves in an attempt to prevent the possible return of gold standard.
On the other hand, a pick-up in inflation rates across the world creates pressure for an appreciation of gold and cryptocurrencies as a fiat money system based on public debt is being put to the test.
Governments in different countries have already pumped $20 trillion ($20,000,000,000,000) in stimulus packages in hope of a rapid recovery. A strong second wave of the Covid-19 virus may thwart this plan.
Precious metals are definitely assets to watch.