Jakarta, CNBC Indonesia – World gold prices strengthened in trading Wednesday (16/9/2020), ahead of the announcement of the monetary policy of the United States central bank (Federal Reserve / The Fed) Thursday (17/9/2020) in the morning.
Launching Refinitiv data, at 17:12 WIB, gold was traded in the range of US $ 1,965.96 / troy ounce in the market spot.
The boss of the Fed, Jerome Powell, on Thursday (27/8/2020) night changed his approach to the inflation target. Previously, The Fed set an inflation target of 2%, when it approached it, the most powerful central bank in the world would normalize its interest rates, aka start raising interest rates.
The Fed is now implementing an “average inflation target” which means that it will allow inflation to rise above 2% “moderately” for “some time”, as long as it is still 2%.
With “average inflation target” Powell said low interest rates could be held on for much longer.
Low interest rates that are held for a long time will certainly have a negative impact on the US dollar, and can push up world gold prices.
Since hitting an all-time high of US $ 2,072.49 / troy ounce on August 7, gold has fallen, never to return above the level of US $ 2,000 / troy ounce. Gold also moves with high volatility, meaning it has fluctuated significantly in a short period of time, the last few weeks.
However, in the last few weeks, the volatility of gold has tended to be low and the price decreased, but it was still able to stay above US $ 1,900 / troy ounce.
Even though it is no longer able to reach US $ 2,000 / troy ounce, Bloomberg Intelligence predicts that gold will continue to strengthen, even if it does not rule out reaching US $ 4,000 / troy ounce in 2023.
Gold price movements are also predicted to be superior to silver which has recently caught the attention of market players.
“The current environment, with central banks continuing to implement loose monetary policy, is a solid foundation for gold, but less impact on silver and copper. Metals for industry are more related to fiscal stimulus and the revival of the global economy,” said Mike McGlone, senior commodities strategist. in Bloomberg Intelligence, as reported by Kitco, Monday (14/9/2020).
McGlone said the gold price rally had just started, meaning that the increase in gold prices would still continue.
“Gold hit bottom (bottom) at US $ 700 in 2008, and peaking at US $ 1,900 in 2019. At the same pace 2.7 times from lows near US $ 1,470 this year suggest gold is heading towards US $ 4,000 / troy ounce in 2023, “he said.
Although McGlone gave an optimistic outlook on gold, he also warned that the level of US $ 2,000 / troy ounce could prove to be a strong resistance. So it will take a while to break through these levels.
CNBC INDONESIA RESEARCH TEAM
(pap / pap)