Gold prices exhibit solid and steady growth on Thursday morning following its consecutive fall on the previous trading sessions. The observed growth in the precious metals market is due to the weakening of the US dollar.
The price of gold futures contracts for February delivery on the electronic trading platform in New York climbed 0.37% or $ 6.7, which sent it to $1,836.9 per troy ounce. Support for the precious metal is located at $1,767.2 per troy ounce, while resistance has gone to $1,840.65 per troy ounce.
The price of the silver futures contract for March delivery also rose by 0.15%. Its current level is $24.117 per troy ounce.
Good news filled the market as the US dollar again began to experience difficulties and reduce its rate. The weakening of the dollar has pushed gold higher, as it becomes cheaper for holders of foreign currency.
The dollar index against a basket of six major currencies fell significantly in the morning – by 0.14%. It is now consolidating around 90.99 points.
The fall of the dollar did not happen out of the blue. Factors such as excitement about progress in the negotiation process for a new fiscal stimulus program in the US began to affect it. In addition, there is an increasing number of positive developments in the preparation for the release of a vaccine against coronavirus infection. In this regard, most market participants generally doubted that the incentives would be approved, but so far the situation is such that an emergency support measure is still an extremely necessary step in dealing with the consequences of the crisis caused by the COVID-19 pandemic.
To date, a group of senators from both parties in the United States has made an active proposal to pass a bill that includes a support measure totaling $908 billion. Although the amount is not too large, investors still have a more or less firm hope that a final decision on this issue will be made in the near future.
All this hype and the negotiation process around the stimulus program will significantly weaken the greenback, which means it will be able to provide significant support to the precious metals market in the short term.
Note that precious metals traditionally act as a means of protection against inflationary risks, which are simply unavoidable in the context of the ratification of major financial stimulus measures.
Most analysts are somehow inclined to believe that in the next five years, the precious metals market will look better than the rest, and it will also have a large-scale growth that other sectors will not be able to boast of.
There is already evidence that precious metals, despite temporary difficulties, will significantly increase in price. For quite a long period, the price of platinum has been consolidating below $1,000 per troy ounce, but now the price has confidently crossed this threshold and continues to strive upwards. Usually, the rise of platinum is inevitably followed by the growth of gold. This is due to the fact that platinum is growing due to increased activity in the industrial sector of the economy, where it is used in production. Meanwhile, gold should wait for a negative situation, when investors will be afraid of the fundamental events that are taking place. This is exactly the situation in the markets today.
Thus, gold and silver will follow platinum in a positive trend. In this regard, it is worth noting that in the period before the new year, we will be able to see a significant increase in their value, which may even lead to new records.
The price of the copper futures contract for March delivery declined slightly to $3.4943 per pound. This is another metal with significant growth prospects in the near future. According to experts, its cost may soon reach $4.5 per pound.
The material has been provided by InstaForex Company – www.instaforex.com
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