Gold Prices Hit Another All-Time High... Bloomberg Predicts Rise Until Next Year

December Gold Futures Record $1941.6
Dollar Weakness, Easing Monetary Policy Expectations

[Asia Economy Reporter Naju-seok] Recently, the price of gold futures, which had been on a continuous upward trend, finally hit an all-time high. This is the result of sustained gold demand from investors driven by a weak dollar and concerns about the global economy.

According to Bloomberg on the 27th, the December gold futures price on the Singapore Commodity Exchange reached $1941.6 per troy ounce (31.1035g) at one point during the session. On the 23rd, the December futures price had already set a record high by trading at $1927.1 per ounce during the session, and it surpassed that level again within two trading days.

The continuous strength in gold prices is due to a combination of factors including the weak dollar and escalating US-China tensions. However, the analysis that the decline in the dollar’s value has a more direct impact on gold prices is gaining traction. Since gold is traded in US dollars, when the dollar’s value falls, the value of gold rises relatively. On this day, the dollar index, which measures the dollar’s value, stood at 94.099, marking its lowest level in two years since September 2018. Expectations that the US Federal Reserve and others will continue monetary easing policies amid concerns over the novel coronavirus (COVID-19) are also supporting the gold rally.

The Wall Street Journal (WSJ) explained, "Gold prices typically rise when economic outlooks are uncertain," adding, "Some experts also predict that stimulus measures will bring inflation, reducing the purchasing power of currency."

The most actively traded August gold futures also recently hit a new high. On the 24th, the August gold price reached $1897.5 per ounce, surpassing the previous record of $1891.9 set on August 22, 2011. On the 27th, August gold futures continued their upward trend, reaching $1909 per ounce during the session.

Some analysts suggest that the strong gold prices indicate the possibility of stagflation (rising prices amid economic stagnation). This means that while the economy remains in a recession phase, prices continue to rise. As the value of fixed-income assets such as government bonds, corporate bonds, and savings deposits declines, investors are flocking exclusively to precious metals like gold.

Domestic gold prices also hit record highs. According to the exchange, at 9:49 a.m. that day on the KRX Gold Market, the price per gram of 1kg gold spot rose 3.73% from the previous trading day to 76,700 KRW, marking an intraday high. The previous intraday high was 73,940 KRW recorded on the 24th.

Experts expect the gold price rally to continue. Investment bank Goldman Sachs forecasts that gold prices will reach $2000 per ounce within the next 12 months, and Bloomberg Intelligence projects the bullish trend to persist through next year.

This content was produced with the assistance of AI translation services.