Can an ounce of gold go for $3,000?

  •   16/09/2020 - 09h21
  •   HARMANT Adeline

Several current factors seem to be pushing the banks and some leading analysts to consider that an ounce of gold could break the $3,000 mark. This is due in particular to the fear of a second wave of Covid-19, but also to the tensions between China and the United States or the uncertainties concerning the American presidential election. It should be recalled that the $2,000 threshold was already crossed by gold during the month of August and that the level of $2,063 was even reached on 6 August.

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Can an ounce of gold go for $3,000?

A gold boom reminiscent of 2008:

It wouldn't be the first time that the gold ounce has experienced such an upward trend since with the 2008 crisis, it had already broken records. This is mainly due to the safe-haven status of this asset since investors generally prefer to put their capital back into it when equity markets fall.

Inflation also plays an important role in gold price appreciation. But this inflation is not yet being felt today, even though investors expect it to rise rapidly. The US Federal Reserve has indeed explained that it would let inflation slip to 2.5% without a rate hike.

According to analysts, there is indeed a good chance that the Covid crisis will be resolved more quickly than the inflation crisis of 2008 and thus lead to a rise in inflation. All the measures that have been put in place by governments to revive the economy after containment are indeed likely to lead to an increase in inflation.

 

A falling dollar that could push gold even higher:

Another argument in favour of a gold boom towards the $3,000 an ounce mark concerns the value of the US dollar, which has recently depreciated following the announcement of the European Union's historic recovery plan. The fall of the greenback thus tends to benefit gold since it favours the exchange rate on the purchase of this raw material. However, Forex specialists expect the dollar to lose further value in the coming months.

In addition, investors interested in gold are more numerous today than before with savers who wish to secure their capital in particular. As for speculation, it remains of course also very strong despite the brake that the authorities tried to put in place at the beginning of the crisis with a reinforcement of the rules on the New York futures market.

Finally, it should be noted that the approach of the American elections increases stock market instability and also serves as a lever for gold. However, gold also fell slightly in early March with the fall in equities. Gold is therefore not invincible and a rise to the new historical record of $3,000 per ounce still leaves some investors and analysts sceptical.