Since the start of 2020, gold has been on an upward trajectory. However, on August 9, the gold investors experienced the largest daily drop of the precious metal in two months. Gold lost 2% and the US dollar regained an upside momentum on a better-than-expected recovery in the US jobs report that was released recently.
Nonetheless, the gold prices remained above $2,000 which is a critical support level. This indicates that the pullback in prices that was recorded recently might just be for the short term. For now, the traders are still relatively bullish on brewing geopolitical uncertainty on what will come in the months ahead.
President Trump might increase the pressure on China before the US Presidential elections expected to happen in November. China at the moment remains reluctant to take countermeasures in targeting the American economy. But, that might change rapidly.
Gold Still Rising
The surge in the number of COVID-19 cases in America and Europe underpins the possibility of gold rising further.
There is no effective COVID-19 vaccine that may be ready for human use any time soon. The resurgence of a second wave may force global fiscal officials to resume economic restrictions once more. Although gold appears slightly overbought from the technical perspective, there is a perfect storm brewing that might keep the bullish momentum going with just the occasional minor setbacks.
Currently, the gold bulls are riding on macros like the increasing coronavirus caseloads, high liquidity in the money market due to stimulus packages, increasing geopolitical risks, and uncertain economic outlook that will maintain an upward demand for the precious metal.
In 2020 alone. Gold has gained 35% as the global fiscal policymakers aim to offer help to a crumbling global financial system by giving unprecedented global stimulus policies. The greenback’s futuristic performance will act as a major factor in how far the gold bulls will go.
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