Jakarta, CNBC Indonesia – Last week, world gold prices fell 4.4% to US $ 1,788.12 / troy ounce. The slump of this precious metal is still not over and continues today, possibly even into late 2020.
In trading Monday (11/30/2020), at 17:13 WIB, gold fell 0.85% to US $ 1,772.86 / troy ounce in the sports market, according to Refinitiv data.
Analysts are now starting to change their projections for gold going forward. Previously, almost all analysts predicted that gold would continue to strengthen and break a record high of US $ 2,072.49 / troy ounce.
Especially for this week, the gold price of analysts on Wall Street is projecting gold will bearish (downtrend).
This can be seen from the weekly survey conducted by Kitco of analysts on Wall Street. Of the 15 analysts who participated, as many as 8 analysts or 53% gave outlook bearish, 6 people or 40% gave outlook bullish (uptrend) and the rest is neutral.
Meanwhile, a survey conducted on market participants or what is called Main Street showed as many as 48% of 1,270 participants gave outlook bullish, 33% bearish, and 21% neutral.
Vaccines from several pharmaceutical companies in the United States (US) and the UK that are claimed to be effective in overcoming the corona virus by 90% or more and without serious side effects are the main trigger for the decline in the price of gold.
When the vaccine is distributed later, life will gradually return to normal, business wheels spin faster, and the economy will revive.
In effect, market players channel their investment into risky assets with high yields, gold which is a safe asset (safe haven) and without returns becomes unattractive.
In addition, the US government’s fiscal stimulus will likely not be of great value if the vaccine is successful in tackling the corona virus. As a result, the “fuel” for gold to climb is reduced.
Sean Lusk, co-director at Walsh Trading, said that the decline in gold was due to investors who took long positions when gold prices were at their highest and now started to exit their long positions.
“What we see here is that investors who buy gold when the price is high are the first to release their positions, investors are likely to buy when the price of gold is at US $ 1,920 / trillion,” said Lusk as reported by Kitco, Friday (27/11/2020 ).
Lusk also said that the price of gold may still drop below US $ 1,700 / troy ounce.
“If the market is able to push gold down again by around US $ 60 to US $ 70, then we can see gold below US $ 1,700 / troy ounce before the decline period ends,” he added.
Lusk sees that gold will only start to rise at the end of 2020, because seasonally the end of December and early January is a good time to buy precious metals.
Although the “wind” is not in favor of gold, but the US central bank (Federal Reserve / The Fed), which will announce monetary policy on Thursday, December 17 in the morning WIB, could be the “savior” of gold.
The fiscal stimulus in the US is still unclear when it will be disbursed, and at what value. Meanwhile, the US economy is said to really need a stimulus to turn the wheels of business back on. Therefore, there is a chance that the Fed will increase its monetary stimulus by increasing the value of asset purchases (quantitative easing / QE). The monetary stimulus from the Fed is another major “fuel” for gold to advance.
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