© Reuters Gold is gaining upward momentum in trading due to several factors, so what are they?
Arabictrader.com – Quotes A significant increase in trading today, Tuesday, led by the growing risks of a possible global recession, together with the decline in the United States.
On the trade front, spot gold contract prices rallied sharply, by around 1.07%, to near the $1807.16 an ounce level, and prices also rallied to around at $1814.05 an ounce.
The most important drivers of the upward trajectory of gold prices during trading
There were a number of factors that fueled gold’s rise during today’s trading; As the decline in the US dollar index, which measures the green currency’s performance against a group of other currencies, caused gold prices to rise; After the US dollar index recorded a sharp decline of about 0.73%, settling near the 103.95 level.
In this regard, it is recalled that the decline of the dollar usually translates into an increase in demand for the precious metal denominated in US dollars, as it has become better, according to investors, to direct their flows towards gold and therefore its price climb.
At the same time, some Commerzbank economists were expecting in this regard that the dollar would soon see a decline, given the possibility that the US Federal Reserve would exaggerate its tightening approach in the future. Which predicts a reduction in the prime interest rate next year; Therefore, the decline of the dollar is associated with the increase in gold prices.
Additionally, rising risks of a possible global recession supported gold’s bullish path through trading as the World Bank lowered its forecast for economic growth in China; Driven by the possibility of an outbreak of the Corona epidemic on a larger scale than the current situation; Which requires the adoption of more preventive behaviors to slow the spread of the virus; Which leads to a disruption of economic activity in China for a longer period than expected.
In addition, the real estate crisis in China will have serious repercussions on economic activity. This increases the possibility of a decline in the global economy, and thus entering a state of recession, which increases investors’ appetite for gold as a hedge against the risks of a possible economic downturn.
The World Bank lowers its forecasts for China’s economic growth
In regards to non-gold metal prices, metals contracts grew 2.72% to approximately $23.843 an ounce, along with metals contracts growth of 1.54% to approximately 1690, $53 an ounce. Additionally, contracts for metallic platinum rose 0.09% and traded about $997.55 an ounce.
