Gold price today: Will Jerome Powell Drive Gold Prices Higher?
Gold and silver prices showed mixed trends on February 12 in the international markets. Gold maintained its offered tone through the early European session and was last seen trading near four-day lows, just below the $1820 level before gaining upward momentum on Friday after weaker-than-expected U.S. jobs data re-ignited concerns over a recovery in the world’s largest economy. Gold April futures contract settled at $1,825.60 t while Silver March futures contract settled at $27.03 t. Both of the metals are showing signs of rejections at the highs of yesterday.
Looking ahead to this week, the major point for traders will be U.S. consumer price data due on Wednesday and Federal Reserve Chairman Jerome Powell’s speech. Gold may witness choppy trade amid lack of fresh cues however there is a possibility of correction if US dollar manages to recover. We expect both the precious metals to remain volatile in today’s session and weakness in the dollar index and hope of U.S. stimulus could support prices at lower levels.
Is USD 1800 per ounce high in an historic perspective? What is the relationship between the price of gold and President Biden’s policy? Has there been a constant price ratio gold/silver per ounce?
SvarSlettTo your first question: Gold basically thrives on uncertainty and the current landscape of heightened global economic uncertainty caused by the accelerating Covid-19 cases, contraction in global growth, geopolitical tensions and the rampant monetary and fiscal stimulus across the globe have fuelled the all-time high upswing in gold and silver prices.
SlettSecond question: Biden’s policies will affect business decisions, tax, regulation, the dollar and fiscal stimulus policy, all of which will affect gold prices. We think the democratic ethos leans towards higher taxes and greater regulation, which can impact stock markets and prompt a spike in the gold price.
Whatever Bidens economic and financial reforms, the COVID-19 debt burden will weigh on any recovery. Investors would do well to diversify at least some of their portfolio into a safe-haven asset like gold, for if the dollar looks likely to decline, the outlook for gold will strengthen.
Last question: Throughout history, the ratio has remained fairly stable with increased volatility beginning in the 20th century. For the whole of the 20th century, the average gold-silver ratio was 47:1. In the 21st century, the ratio has ranged mainly between the levels of 50:1 and 70:1, breaking above that point in 2018 with a peak of 104.98:1 in 2020. The lowest level for the ratio was 40:1 in 2011.