The gold price has shown a very close correlation with the US equity market in recent hours. Tonight the Dow 30 Future fell 115 points (shown here in the CFD price US 30). At exactly the same time the gold price had risen by $8 to $1,568. Then this morning, a partial recovery began in the Dow and the price of gold fell back again. What a correlation. At the moment, the corona virus is a determining factor, especially on the Asian markets. Suddenly, a pathogen is stirring up fear on the markets, as was the case with the Dow last night.
A tiny quick Risk Off-Trade with ups and downs in the gold price
And bang, where there is uncertainty, gold can rise quickly. And now, very recently, gold has dropped back to $1,560, losing all its gains from tonight. So quickly the “flight” to the “safe haven” called gold can end again. So we have seen a very quick, tiny Risk Off-Trade, the switch from stocks to gold, overnight. Even though it has already come to an end, this overnight movement shows that the market reacts to uncertainty with lightning speed. The price of gold can jump up at any time. In the following chart (price movements since yesterday morning) we see the gold price in red-green against the Dow 30 in blue.
In the following chart, we see the development of the gold price in a larger picture, namely since the last 30 days. After the fall at the beginning of January, there has been a stabilization in the last few days with small daily rises.
Does Gold weaken over the course of the year?
Could the price of gold even lose ground towards 1,400 Dollars in the course of 2020? The reasons for this could be, for example, a better global economy. Rising US bond yields and a rising US Dollar could also push against gold. And there is also the theory that physical demand for gold from India and China could decline in the current year. Read detailed reasons for a possible weaker gold price by clicking here on investing.com. On the other hand there is, for example, the opinion of the world’s largest hedge fund last week that the gold price could rise to $2,000. You can read more about this by clicking here.