The price of gold in February showed an increase of more than 16%

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The completion of the last winter months in the global gold market was unusually hot. After reaching the minimum prices in mid-August of 2018 at the level of 1160 U.S. dollars per Troy ounce (31.1 grams) precious metal could grow more than 16% to $ 1346, tested February 20 of this year a peak of ten months ago. This rally was made possible thanks to a change in monetary policy of the fed and the widening of the foreign trade conflicts in the light of the warlike tariff policy of the administration of the tramp, as well as the aggravation of the geopolitical and military situation in the world.
Growth in the value of gold also contributed to the weakening of the USD and falling against the deterioration in U.S. macroeconomic statistics, the yield of US Treasury bonds as an alternative to investing in gold. In addition, gold, which serves as a safe-haven asset, remained very attractive in the face of increased concern in the markets nearby such problems as Brexit, escalating political uncertainty in Europe and Venezuela. An additional factor in favor of the increased demand for gold were policies of many global Central Banks to increase the share of gold in its reserves.
However, in the last days of February the price of gold marked a downward movement caused by the pressure of a strengthening dollar and the desire of some investors to take profits on the results of the end of the month. A radical change took place in the market after gold prices broke through key psychological support at $1320 per ounce. Additional impetus to the downward trend in the cost of gold futures gave published yesterday, the Commerce Department, U.S. GDP growth, which in the fourth quarter of last year was 2.6% with correction for seasonality and inflation.
The release showed that the growth of the US economy in 2018 was the strongest in 2015 and above 2.2 percent in 2017. This has strengthened the market’s expectations regarding the growth of Treasury yields and the U.S. dollar, which in turn made gold denominated in U.S. currency, less attractive. Today futures for the precious metal on the new York Mercantile exchange declined at the time to $1306, later to be corrected before the long weekend to a comfortable values in the $1310 per ounce.
Most likely, supporters of the gold retains hope for the weakening of the U.S. dollar in the medium term, given the statements of Donald trump on the benefits of the devaluation of the dollar and lower expectations of market participants on the increase in fed interest rates before the end of 2019. ___________________
Gennady Popov,
Analyst,
Finist