Gold has risen to a record high and has fallen quickly. "There is potential to increase precious metal rates"

After geopolitical turmoil gold regains its luster in the eyes of investors and central banks. It quickly rose to record levels, but also fell quickly. Despite this, the ore is the most expensive in seven years, and analysts see the potential for increases in precious metals. Especially since platinum and silver are also gaining momentum in the Middle East, and palladium is breaking the tops of all times. Is it the winds of uncertainty that drive investors to safe havens, or is it more about central bank policy? How do these historic increases translate into increases in fuel prices?

Precious metals are gaining in times of instability, but what is happening lately is a phenomenon of recent years. For the first time in history, palladium prices have reached $ 2000 per ounce. Silver and platinum rates also jumped up, and the price of gold rose temporarily to the highest levels in almost 7 years. Currently, the rate of raw material ranges between 1565 and 1573 dollars per ounce. TMS Brokers analysts estimate that the growth is not over yet. 

Bartosz Sawicki, TMS Brokers

According to their forecasts - in 2020 there will be many topics fueling investor uncertainty and generating demand for gold.

- The Phase One agreement prevents further increases in tariffs between the US and China, but no says nothing about the prospects of any Second Phase, while many key contentious issues remain open - ocenia Bartosz Sawicki, Head of the Analysis Department at TMS Brokers.

Gold price rally

During the nervous Wednesday, gold reached the price of $ 1600. However, on Thursday they gave up just as quickly to the strength of the supply side. The price of the bullion fell below $ 1550 per ounce. Despite the fluctuations, analysts emphasize that increases are possible and remind that central bank demand for gold is the highest since Nixon.

- The US presidential election will be important not only for the dollar and Wall Street, when President Trump will use all available means to protect the ideal picture of the economy, including attacks on the independence of the Fed. The wave of negative information on these, and probably other topics, will support gold price increases - translate TMS Brokers analysts.

In the first week of trade in the new year, justified after the attacks, fears of armed conflict in the Middle East supported gold, which increased by nearly 4 percent. The metal king has gained almost 9% since the November hole. and has a chance to shine all year round. This is a tendency that may persist in the long run, especially since gold has risen by 18,5 percent. in 2019, however, on the commodity market, its brilliance overshadowed palladium, which in 2019 grew by more than 58 percent.

The exacerbation of the conflict in the Middle East also caused the black gold to jump. After Iran attacked US military bases in Iraq, the oil market reacted with a significant price increase of more than 1,2 percent. A day later, this dramatic growth subsided, but the upward trend is still visible, which means that the road to de-escalation of the conflict is a long way off.

The oil goes off

Konrad Białas, chief economist at TMS Brokers, believes that the stock market benefits most from calming moods, and Petroleum pits the strongest. This shows how much in recent days the oil market has been dominated by speculative capital, which is now leaving the position. Still, if we assume that the global economy is supposed to be better, and OPEC members want to earn the most from oil, the foundations will eventually give support for a return to growth.

- What it takes for oil to reach $ 100 a barrel? There would have to be realistically disrupted production for a long time, which would have an impact on global stocks. What we are seeing in the markets today is the need for a higher risk premium. There are no disturbances now in terms of extraction or transmission of the raw material. Now there is just "greater risk". When investors see these threats, they enter risk into the price-assesses Bartosz Sawicki, Head of the Analysis Department at TMS Brokers.

The US and Iran are not seeking to escalate the conflict, which the markets welcome and abandon safe assets in favor of the return of the stock market rally. - Now investors should react less and less to news from the Middle East, and turn their attention to previously important issues - the strength of the global recovery and the US-China trade agreement- adds Białas.

source: TMS Brokers press material