Gold still on the upswing

Gold continues to perform at a high level well above the psychologically important mark of $ 1,400 a troy ounce this week despite the equally buoyant US dollar. On July 18, 2019, a six-year high was $ 1,448.15 per ounce.

Whether the price of gold will continue its upward trend and even rise well above the mark of 1,500 US dollars per troy ounce remains to be seen. Eugen Weinberg, head of commodity analysis at Commerzbank, believes that higher prices in the coming months are quite possible. Price drivers are interest rate speculation speculations that would have led to a marked decline in bond yields.

In Germany, nominal bond yields up to and including a maturity of 15 years were temporarily in negative territory in July. The nominal yields of bonds issued by other countries in the eurozone also suffered this fate. The associated investment crisis drives investors into alternative assets: Gold gains in attractiveness as an “interest-free” (and at the same time long-term stable) investment through negative interest rates.

The central banks have also contributed to the recent rally, as figures from the World Gold Council (WGC) show. Especially Asian central banks have increased their reserves significantly. For example, the People’s Bank of China (PBoC) increased its holdings by 16 tons in May, adding another 10 tons of gold in June. Thus, since December last year, the central bank has expanded its gold reserves by a total of around 85 tonnes (as at the end of June). Whether the price of gold will continue its upward trend and even rise well above the mark of 1,500 US dollars per troy ounce remains to be seen. Eugen Weinberg, head of commodity analysis at Commerzbank, believes that higher prices in the coming months are quite possible. Price drivers are interest rate speculation speculations that would have led to a marked decline in bond yields.

 In Germany, nominal bond yields up to and including a maturity of 15 years were temporarily in negative territory in July. The nominal yields of bonds issued by other countries in the eurozone also suffered this fate. The associated investment crisis drives investors into alternative assets: Gold gains in attractiveness as an “interest-free” (and at the same time long-term stable) investment through negative interest rates. The central banks have also contributed to the recent rally, as figures from the World Gold Council (WGC) show.

Especially Asian central banks have increased their reserves significantly. For example, the People’s Bank of China (PBoC) increased its holdings by 16 tons in May, adding another 10 tons of gold in June. Thus, since December last year, the central bank has expanded its gold reserves by a total of around 85 tonnes (as at the end of June).