The gold continues on the rise, because of the uncertainty in the markets. This is thanks to its natural condition as a reserve asset, and analysts at Citi expect that to continue as well because of its characteristic of reserve assets.
The world has been ravaged by a pandemic situation in the world with a century of precedence. The uncertainty has been the concept that guided the decisions and inflections in the world. Therefore, the area most affected has been the world economy.
In this way, investors and traders have changed their way of doing things. And now focus in investing in that which will make your capital and your money in the long term. That is the role that gold has fulfilled up to now.
The gold exceeds its ceiling by over $2,000
The year 2020 has been a great dilemma for all. However, the direct reflection of the effects of the global crisis has been seen in the behavior of the financial markets.
And also in the focus of investors in reserve assets, allowing the gold to continue rising.
Even today, when the financial markets have recovered and are rising once more. The majority of investors around the world know that this boom is due to government subsidies.
So seriously doubt their profitability in the long term, and therefore of the security of their capital. Being here in, where it enters the gold. Well, now the gold continues on the rise for good performance.
With gold surpassing the $2,000 this week. The economists at Citi have clarified exactly what they think is driving the increase in the precious metal, and what that might tell us.
The spot price of gold, currently around $2.058 per ounce has increased by over 4% this week and is scheduled for its ninth week of gains in a row, is the increase in weekly in a row-longest since 2006.
The gold continues to the upside in the markets, thanks to its characteristic of a reserve asset. Source: TradingView
And it is that, gold is the main active reserve of value that has ever existed in the history of mankind. This is thanks to the absence of a strong correlation between the gold price and financial markets. As well, gold continues to rise.
What can replace the dollar?
The dollar continues with a performance that leaves much to be desired, however gold continues to rise.
Although the day Friday, the american currency had a good pace of operations in the session, after the publication of the employment figures u.s., some analysts believe that there is still a long way to recover to the dollar.
Gold recovery was also not an indicator that the dollar would lose its crown as the “main asset of international reserves”, explained the analysts of Citi.
The economists belonging to Citi, they said, that while some have suggested that gold’s rise following the depreciation of the dollar, “no other currency or country is ready or willing to assume the role of the dollar”.
In fact, the “massive stockpile” of dollars from the Federal Reserve of the united States in exchanges of currency with other countries, also known as “swap lines”, reinforces its position as the world’s reserve currency.
“Even if the dollar is now worth less in terms of gold, so are all the other coins”, they said. That means that your “exorbitant privilege remains.”
In summary, the economists at Citi said that the recovery of gold was driven by the monetary easing of the central banks, which resulted in negative real returns.
What this tipping of the foreign exchange will allow the gold to continue rising?