PETALING JAYA: It is usually not a good sign when investors start to seek shelter in gold.

It is an indication that the market is pessimistic on lingering concerns about the global economy, and with fears of a second wave of the coronavirus (Covid-19).

The bullion, which is now at its all-time high, has been rallying on the back of geopolitical tensions, low interest rates globally, the weakening US dollar and quantitative easing by central banks.

As at press time, the precious metal hit US$1943.40, a level that the market has not seen before. Compared to the March 19 stock market crash which also saw the gold price tumble to US$1,471.24 per ounce, this was already a 32.09% increase in just four months.


There has been renewed interest in gold since the beginning of July, which became even more apparent starting July 16 when the price was then US$1,797.16. Pundits have estimated that the price could breach more than US$2,000 an ounce while the over-optimistic ones project it to fly up to US$10,000.

In an era when Covid-19 has taught the world that the unprecedented is the new precedent, ultimately, the business world is worried that there could be a recurrence of 1970s stagflation.

This is a situation where economies are staring at high inflation rates, slow to stagnant economic growth and high unemployment rate.

A fund manager said the rally in gold price was a sign of a major problem with the world’s economy. In his personal views, Aberdeen Standard Islamic Investments (Malaysia) Sdn Bhd chief executive officer Gerald Ambrose said it is a sign that all is not well and that people are less optimistic about the future of the economy in the near term. It also heralds a significantly long-term weakening in the US dollar.

“With global interest rates at record lows and headed lower, and quantitative easing spreading from US to Japan to Europe, the United Kingdom and now everywhere, the developed, and increasingly the emerging markets’ central banks are printing enormous amounts of notes to try to stimulate the economy to recover from the Covid-19 shutdown, ” he told StarBiz.

Ambrose added that to fund the money printing, central banks were issuing unprecedented sovereign bonds, with very low coupons.

Like many other economists, he sensed that private sector buyers are starting to question why they should buy these bonds, which comes with a real danger that they will not get their principal back or at least, worth far less.

Ambrose said the buyer of the last resort would then be the central banks, the likes of the US Federal Reserve, the Bank of Japan, the Bank of England, the European Central Bank and maybe even Bank Negara.

“This is the beginning of inflation, especially if it leads to the cost of goods sold.

“If there’s no increase in productive economic activity, then that could turn into stagflation, ” he said. RHB Investment Bank regional equity research head Alexander Chia said the default action for those who have a very negative view of the future would be to run to a safe haven store of value such as gold. While people will typically buy gold when there is inflation, he stressed that inflation is not going to be a factor for the longest time going forward, given that commodities are still somewhat subdued. “So really, it’s a store of value against the global economy blowing up.

“Bear in mind that if you invest in gold, it’s a zero return. There’s no yield. But of course with most other risk assets also generating pretty low yields and with the interest rates in the US close to zero, then to them, it’s almost the same if you put your money in gold, ” Chia said.

Tomei Consolidated Bhd managing director Datuk Ng Yih Pyng said generally, there has been a surge in demand for gold and he is of the opinion that the trend will continue in the meantime. “A lot of this depends on the US dollar, the containment of Covid-19 and also the interest rates. There are a lot of people looking for alternative investments and gold has always been a safe haven. So during times like this when we’re facing the pandemic, uncertainties and low interest rates, I think gold will go even higher, ” he said.

Asked if this would be a boon for Tomei’s business, Ng said it would have some positive impact for the company’s performance in terms of accounting. In terms of the company’s expectations for 2020, he said the group has taken quite a hit during the movement control order (MCO) with no sales. “The only reason we can do better, if any, is because of the increase in gold price. At this juncture, I think it’s not right to make any forecasts, ” he said.

Tomei hit limit-up yesterday after the counter rose 19 sen or 38.38% to 68.5 sen while Poh Kong Holdings Bhd soared 14.5 sen or 27.88% to 66.5 sen.

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i could have sworn that when i bought gold at Rm1100 in 2002, there is LOTS OF RETURN at RM8,000 plus now!

This post has been edited by prophetjul: Jul 28 2020, 08:25 AM

SINGAPORE/NEW YORK/LONDON
(July 27): Gold’s unrelenting march higher
shows no signs of slowing, after a plunge
in the dollar swept prices past the previous high set in 2011 and put the metal on
track for even bigger gains.
Bullion’s surge came as a gauge of
the US currency sank to the lowest in
more than a year, the latest in a long line
of bullish factors — including negative
real rates in the US and bets the Federal
Reserve will keep policy accommodative
when it meets this week — that are pushing prices ever higher.
With the world facing an extended period of unprecedented economic and political turmoil, gold’s now got US$2,000
in its sights. Some in the market suggest
the haven could rise even beyond that.
Nascent signs of gold’s record-breaking ascent began to show in mid-2019,
when the Fed signaled a readiness to cut
interest rates as uncertainty — primarily
about the impact of the US trade battles
— clouded its outlook. The rally gathered pace in early 2020 as geopolitical
tensions rose and the coronavirus outbreak hurt growth worldwide, pushing
governments and central banks to unleash
vast amounts of stimulus, and sending
real interest rates slumping further into
negative territory.
“Strong gains are inevitable as we enter a period much like the post-GFC environment, where gold prices soared to record levels as a result of copious amounts
of Fed money being pumped into the financial system,” said Gavin Wendt, senior
resource analyst at MineLife Pty. A weak
dollar and negative real rates are providing further impetus. Gold may consolidate before setting its sights on US$2,000
and above in coming weeks, he said.
It’s not just price moves that are proving historic. The virus shined a spotlight
on a traditionally overlooked corner of
the market: logistics. A chaotic period in
March saw extreme distortions between
London and New York gold prices due to
an unprecedented snarl in the movement
of physical metal, with the grounding of
BY RANJEETHA PAKIAM, JUSTINA VASQUEZ
& ELENA MAZNEVA, JOHN AUTHERS, STEVEN
FRANK, VIVIEN LOU CHEN & MATT TURNER
Bloomberg
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flights and refinery shutdowns sparking concerns about a shortage of bullion
available in New York in time to deliver
against Comex futures.
That crisis eased — there was enough
gold — but the dislocation prompted
CME Group Inc, which owns Comex,
to announce it would offer a new futures contract with expanded delivery
options that included 400-ounce bars,
which is the size accepted in London.
It later said traders will be able to deliver gold in London vaults against the
new contract.
Fed meets
Next up for investors and a possible fillip
for gold, is this week’s Fed meeting July
28-29, where officials are expected to
keep interest rates near zero and debate
a possible shift in its strategy.
The meeting may be a platform for a
strong message that change is coming,
opening up the possibility for more unconventional policies further down the
line, according to Chris Weston, head
of research at Pepperstone Group. “If
we think about real yields and what the
Fed is doing, it just suggests to me that
it’s a matter of time before real yields
continue to trend lower and gold goes
higher,” he said.
The Fed’s path forward will be closely
watched. From December 2008 to June
2011, the Fed bought US$2.3 trillion
of debt and held borrowing costs near
zero percent in a bid to shore up growth,
helping send bullion to a record in September 2011.
Forecasts for further gains have been
building even before gold’s most recent
breakthrough. Bank of America Corp has
stuck with its April forecast for US$3,000
gold over the next 18 months. UBS Group
AG sees prices reaching US$2,000 by
end-September, global chief investment
officer Mark Haefele wrote in a note Monday. The group has added the metal to its
“most preferred asset list.”
“You simply couldn’t pick a more perfect storm of events which would allow
for gold to perform,” said Steve Dunn,
head of ETFs at Aberdeen Standard Investments. “With low interest rate policies, negative real rates, super accommodative monetary policy, huge amounts of
global fiscal spending, a weaker dollar,
escalating US-China tensions and no
clear end in sight for the coronavirus
pandemic, all of the parts of the equation are coming together.”

The message behind gold’s rally: the world economy is in trouble

(July 27): It’s easy to forget now but there was a time early on in the pandemic when the price of gold was in freefall.

It was a curious thing, what with the virus sparking a collapse in the global economy, and it would prove in time to be one of the great head-fakes in the recent history of financial markets. For the pandemic of 2020 would soon show itself to be the driving force behind one of the most ferocious rallies the gold market has ever seen. At the close of trading in New York on Friday, bullion had spiraled to $1,902.02 an ounce, some 30% higher than the low it hit in March and just 1% off a record high set back in 2011.


The virus has unleashed a torrent of forces that are conspiring to fuel relentless demand for the perceived safety from turmoil that gold provides. There’s the fear of further government-ordered lockdowns; and politicians’ decision to push through unprecedented stimulus packages; and central bankers’ decision to print money faster than they ever have before to finance that spending; and the plunge in inflation-adjusted bond yields into negative territory in the U.S.; and the dollar’s sudden decline against the euro and yen; and rising U.S.-China tensions.

All these things, when taken together, have even triggered concern in some financial circles that stagflation -- a rare combination of sluggish growth and rising inflation that erodes the value of fixed-income investments -- could take hold across parts of the developed world.

In the U.S., where the virus is still raging and the economic recovery is stalling, this debate is growing louder. Investor expectations for annual inflation over the next decade, as measured by a bond-market metric known as breakevens, have moved higher the past four months after plunging in March. On Friday, they hit 1.5%. And while that remains below pre-pandemic levels and below the Federal Reserve’s own 2% target, it is almost a full percentage point higher than the 0.59% yield that benchmark 10-year Treasury bonds pay.

The main driver behind gold’s latest rally “has been real rates that continue to plummet and don’t show signs of easing anytime soon,” Edward Moya, a senior market analyst at Oanda Corp., said by phone. Gold is also drawing investors “concerned that stagflation will win out and will likely warrant even further accommodation from the Fed.”

U.S. Yields Hit Another Record Low in Week That Havens Dominated

U.S. bond markets have been a driving force behind the rush to gold, which is serving as an attractive hedge as yields on Treasuries that strip out the effects of inflation fall below zero. Investors are looking for safe havens that won’t lose value.

The mania for gold right now has trickled down to Main Street. Retail investors have helped put ETF holdings backed by gold on track for an 18th straight weekly gain, the longest streak since 2006. Meanwhile, gold posted its seventh weekly gain on Friday, and analysts don’t expect the increases to end anytime soon.

“When interest rates are zero or near zero, then gold is an attractive medium to have because you don’t have to worry about not getting interest on your gold,” Mark Mobius, co-founder at Mobius Capital Partners, said in a Bloomberg TV interview. “I would be buying now and continue to buy.”

Analysts have been predicting huge upside for gold for several months. In April, Bank of America Corp. raised its 18-month gold-price target to $3,000 an ounce.

“The global pandemic is providing a sustained boost to gold,” Francisco Blanch, BofA’s head of commodities and derivatives research, said Friday, citing impacts including falling real rates, growing inequality and declining productivity. “Moreover, as China’s GDP quickly converges to U.S. levels helped by the widening gap in Covid-19 cases, a tectonic geopolitical shift could unfold, further supporting the case for our $3,000 target over the next 18 months.”

Bank of America’s bold prediction was made after gold prices initially dropped in March as investors sought cash to cover losses on riskier assets. Prices quickly recovered after a surprise cut to the Fed’s benchmark rate and signs that the economic toll of the coronavirus would lead to massive stimulus efforts from global governments and central banks.

This isn’t the first time gold has gotten help from central bank stimulus programs. From December 2008 to June 2011, the Fed bought $2.3 trillion of debt and held borrowing costs near zero percent in a bid to shore up growth, helping send bullion to a record $1,921.17 in September 2011.

The crisis a decade ago was all about banks, said Afshin Nabavi, head of trading at Swiss refiner and dealer MKS PAMP Group, who nows sees gold “pointing towards $2,000.”

“This time, to be honest, I do not see the end of the tunnel,” he said, at least until U.S. elections in November.

This post has been edited by prophetjul: Jul 28 2020, 08:48 AM

https://www.fxstreet.com/news/gold-price-an...er-202008042036

Gold Price Analysis: XAU/USD continues climbing after smashing through the $2000 psychological barrier
NEWS | Aug 04, 20:36 GMT | By Rajan Dhall, MSTA
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Gold has risen nearly 2% and broken through the $2K per ounce level on Tuesday.
Since the COVID-19 pandemic took hold of the markets the metal has moved 57% higher.
Fundamental backdrop
In great times of worry gold will always since and this time is no different. The COVID-19 pandemic has hit the economy hard with shops and business being forced to close due to lockdowns being imposed by governments. Even now the first wave been and gone countries like Australia are being forced to act again as a second spike of cases has been noted in some densely populated areas. The uncertainty that this brings is sending investors and trades toward safe-haven assets and gold is one of the biggest beneficiaries.

As there is all this uncertainty, the worlds central banks are pumping the markets with liquidity via QE and this has a knock-on effect to yields in the fixed income markets. If inflation rises due to the weakening of the dollar and yield collapse this could mean gold becomes more attractive. Gold does not offer any interest payments or dividends but it is a store of value.


In a very negative scenario, if the price of the dollar continues to fall at its current pace it could mean problems in the inflation rate. If the COVID-19 pandemic gets worse in America and the producers of the raw goods see a rise in demand (due to the import prices rising) inflation in real terms would rise. This coupled with rising unemployment figures and jobless claims is a very toxic mix. To top this all off, the US is still at odds with China. If the two worlds largest economies continue to butt heads gold could continue to be in demand.

Gold monthly chart
It is hard for technical analysts for forecast where a price will get to when all-time highs are breaking. Fibonacci forecasts have been a great tool in the gold market and when the all-time high of 1980 broke the expansion tool worked a treat. This time around as you can see from the chart below there are two key Fib extension levels to keep an eye on. The 138.2% at USD 2256.30 per ounce is the first one and the second lies at USD 2461.66 per ounce. I would round off the second level to USD 2500 per ounce and the price might struggle there. Obviously these are just projections based on one methodology and there is a chance that the bulls may crash through the levels.

For now, as the price keeps making higher high higher low waves keep following the trend. There seems to be no stopping the yellow metal and with soo much uncertainty around what is to say the price won't hit USD 3K.

Whole world is printing money.

We may see $3,000 sooner than later.

This Fed is many times worse than Bernanke's helicopter money. Printing to infinity.

No need to be gold bug. Just allocate 5 to 10% of assets to gold.
In 2002, i was just interested to get more returns than FD. So i just plunk all my FD into gold!

Good correction.....to form the handle of the cup.
The last high of $1920 becomes the support.

When the handle is fully formed, watch out!

If you want to sell, you should have done that earlier when the technicals were fully stretched.

https://www.investopedia.com/terms/c/cupandhandle.asp

https://www.thebalance.com/trading-the-cup-...0and%20%2499.65.

Who do you sell to?

More effort i suppose to get a few % more.

Kijang at Maybank is 4 % spread. 8% is pretty high.

Why?

Do you expect to lose everything in gold?

When i invested in gold in 2002, it was just to beat the FD. And it did by a wide margin.
Of course, i invested when it was an unwanted asset at the time.

Now its getting the headlines, its at a high. Investing at a high in anything is a nigh risk.
But you wont lose everything in it. Depending on your timeline, of course.
My 2002 gold is still in my pockets.

Then qualify your statement. Its as if you will lose when you buy gold with that line.

To invest in an asset with a mindest of " invest with the money you can afford to lose".

That is a betting mindset.

Semantics. It's the same mindset.

Why would anyone encourage someone to invest with a mindset of losing their money?

Gold or any investment, why would anyone encourage anyone to have a mindset of losing money?

Do you? Invest to lose money?

Afford to lose? No one can afford to LOSE anything. That's already a precondition of losing.
IMO that's a bad way to suggest on investing.

I differ. That's a different meaning altogether.
The best way is to tell them to read up and learn first from whatever articles before plunging in.
NO ONE wants to lose anything. Why even suggest that as a starter liner?

Sure. But it does not need to be the punchline of an investment?