Southern Times Correspondent
The gold price started the week, last week, on a small pick after a drastic fall on 15 June from 1 302.09 to 1 279.37. However, the precious metal started to pick up at the beginning of the week giving a ray of hope for the metal.
Generally, the precious metal has been fixed within the range of $1,270 to $1,350 per ounce from the month of April to date. The recent USA rate hikes and continued trade wars are fingered as the major influencers of the drastic price decline. Although the price seem to be recovering, analysts have mixed forecasts on the performance of the precious metal.
Many events have been unfolding in the global market, and these events have a bearing on the decisions that gold traders and investors make.
Recently the American central bank hiked its interest rates which pushes the gold price lower as the dollar strengthens. Another event was the decision by the European Central Bank (ECB) to end its 2.6 trillion-euro bond purchase programme by year-end but signalling its first-rate hike would come later.
This also puts pressure on the metal price. On the other hand, the US-China trade wars remain to underpin global gold prices and additional to the war is the recent US-North Korea engagement on the commitment to denuclearise the Korean peninsula.
Most analysts believe that the US has taken a soft approach on the matter, fuelling the ongoing tussle between US and China.
Experts have mixed forecasts on the gold performance due to the different global pressures and decisions arising that affect the metal price movement. Some analysts are optimistic that the global gold price will gain momentum towards $1,325 in the immediate short term. Others are of the view that the price will probably extend down to the $1 250 level over the longer-term.
Gold has a lot of pressure from the strengthening US dollar which has a bearing on the value of gold overall. Some reports are of the view that the price is going to continue to be volatile but what’s more significant is the fact that the price has broken through a major uptrend. There have been fears over damage to the global economy due to the trade wars between the US and China and defensive dollar demand in the context of global fears and losses in commodity prices, and these would tend to weaken gold.
For African countries, a higher gold price increases foreign exchange reserves and expands the financial performance of companies mining gold in various countries on the continent. Lower gold prices may reduce foreign exchange reserves which becomes a disadvantage for African countries.