Gold price has been peaking up strongly on the international commodity market,on the back of a weaker dollar and low interest rates.
The metal was trading at $1,220.9 last Tuesday. It rose by $53.20 an ounce to $1,247.80 on Nasdaq, the highest price since February 2015 and an 18 per cent jump since the start of 2016.
In Ghana, it is good news not just for the gold industry but the country as a whole. The country’s export revenues for 2016 are bleak following the fall in crude prices as well as an imminent shortfall in cocoa production.
Gold had been struggling to break through the $1,200 an ounce threshold since February 2015. However, it began inching up gradually over $1,100 on January 20, 2016.
The recent rally, according to The Week, was caused by the move to negative rates from some central banks, which in turn came in response to concerns over the global economic outlook.
“This triggered a rush to ‘safe havens’ such as gold as the dollar fell back from its persistently high level of recent months – the metal is traditionally a hedge for the greenback,” The Week reported.
However, leading global investment banking firm, Goldman Sachs says the commodity is still vulnerable to improvements in rates and the dollar and will fall to $1,000 an ounce or below later this year.
Gold is negatively correlated to the US dollar, hence a weaker dollar explains the surge in the price of the commodity.
The investment banking firm notes that the upswing caused by panic over the state of the global economy has been overdone. It predicts the global economy will avoid a major downturn.
“The US Federal Reserve will press on with at least some upward moves in interest rates and that the dollar will get back into its stronger position relative to other currencies,” Goldman Sachs forcasts.
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