© Archyde.com Gold is gaining upward momentum during trading due to several factors, so what are they?
Arabictrader.com – Quotes A significant rise in trading today, Tuesday, driven by the escalating risks of a possible global recession, along with the decline in the US.
In terms of trading, the prices of spot gold contracts recorded a strong rise, by about 1.07%, to settle near the level of 1807.16 dollars an ounce, and prices also made an increase, to settle near 1814.05 dollars an ounce.
The most important drivers of the upward trajectory of gold prices during trading
There were a group of factors that boosted the rise of gold during today’s trading; As the decline in the US dollar index, which measures the performance of the green currency against a group of other currencies, resulted in an increase in gold prices; After the US dollar index recorded a sharp decrease by approximately 0.73%, to settle near the level of 103.95 points.
In this regard, it is mentioned that the decline in the dollar usually results in an increase in demand for the precious metal denominated in the US dollar, as it has become better, according to investors, to direct their flows towards gold and then its price rise.
At the same time, a number of Commerzbank economists expected in this regard that the dollar would soon witness a decline, given the possibility of the US Federal Reserve exaggerating its restrictive approach in the future. Which calls for a reduction in the main interest rate next year; Thus, the decline in the dollar is associated with the rise in gold prices.
Moreover, the increasing risks of a possible global recession supported the bullish path of gold through trading, as the World Bank lowered its forecasts regarding economic growth in China; Driven by the possibility of an outbreak of the Corona epidemic on a larger scale compared to the current situation; Which necessitates adopting more preventive behaviors to slow the spread of the virus; Which leads to disruption of economic activity in China for a longer period than expected.
Also, the real estate sector crisis in China will have serious repercussions on economic activity. Which enhances the possibility of a decline in the global economy, and then entering into a state of recession, which increases the appetite of investors for gold as a hedge against the risks of a possible economic downturn.
The World Bank lowers its forecast for China’s economic growth
As for the prices of metals other than gold, metal contracts rose by 2.72%, recording about $23.843 an ounce, in addition to the growth of metal contracts by 1.54%, to record about $1690.53 an ounce. Also, platinum metal contracts rose by 0.09%, and recorded approximately $997.55 an ounce.