According to Kitco, gold prices continue to increase strongly, investors flock to gold as demand for other traditional safe-haven assets, including the USD and US bonds, weakens.
The gold rally began as soon as the market opened in Asia on Monday morning and continued through the night into the North American trading session.
Important technical resistance levels do not create any significant barriers for gold, as the market is witnessing a strong increase. Spot gold is currently trading at a new all-time high of $3,413.84/ounce, up nearly 3% from the previous day.
Gold is approaching an all-time high adjusted for inflation, set in January 1981, currently standing at $3,448/ounce.
A sign of a new strong increase in gold is the soaring investment demand. Last week, SPDR Gold Shares (NYSE: GLD), the world's largest gold exchange-traded fund, saw its assets under management exceed $100 billion for the first time in history.
"With geopolitical volatility and uncertainty continuing to driven risk-off sentiment, investors are increasingly turning to gold as a strategic haven," said analysts at State Street Global Advisors, a marketing firm at GLD.
In a similar move nine years ago, analysts noted that gold is benefiting from a weak US dollar. Selling pressure started last night and continued in the North American trading session. The USD index is currently trading at 98.4 points, the lowest in more than three years.
At the same time, the US 10-year bond interest rate remained high at over 4.4%.
Analysts said gold continues to benefit as confidence in the US weakens due to the prolonged trade war. China has increased its conflict with the US, vowing to retaliate against countries that have ceded to the US request to isolate Beijing.
China has also taken new steps in trade to isolate the US in the global commodity market, reduce oil imports from the US by up to 90% and buy record amounts of crude oil from Canada. At the same time, China has also increased soybean imports from Brazil.
signing a trade deal quickly with Japan has also become more difficult for the US.
At the same time, US President Donald Trump's statements on Thursday about wanting to fire US Federal Reserve Chairman Jerome Powell further undermine confidence in the USD, and some analysts believe that the USD could fall further.
"Ground confidence in US policymakers has been very low after the tariffs were imposed; the sacking of Mr. Powell should be seen as an unmanly milestone if they are to maintain some confidence in the Fed and the US," Fox analysts at Brown Brothers Harriman said in a note on Monday.
"The foreign exchange market is always the fastest respondent to bad policy decisions in a country. Why do global investors want to hold assets in a country where central bank independence is in danger?
We know that the Trump administration always wants the US dollar to weaken, but this is a completely wrong reason," the analysts added.
Looking ahead, some analysts see gold on the rise and could reach $3,500/ounce.
"Gold has gained strongly since hitting the 50-day moving average early last week. We consider the recent rally as the result of an adjustment after gold prices rose sharply in late December.
This upside potential makes us believe that gold could surpass $3,500 an ounce," said Alex Kuptsikevich, chief market analyst at FxPro, in a recent note.
In a recent commentary to Kitco News, Eric Strand - founder of the precious metals company AuAg Funds, said that in the current environment, gold is still cheap under $4,000/ounce.
