Gold may rise to $2,000 by year end, expert says
Gold price faces short term correction but has the chance of hitting US$2,000 again at the end of this year, an expert at YLG Bullion International (YLG) said on Friday (September 25).
The price of the precious metal dropped by over $100 per ounce from $1,950 to $1,850 over four days from Monday.
Pawan Navawattanasap, YLG’s chief executive officer, said the price of gold had dropped sharply at the beginning of this week due to investors' mass sell-offs to take profits after several mutual funds boosted their investment in the precious metal.
She said the price at the beginning of this year was $1,517 per ounce and hit the highest at $2,075 per ounce, generating profits of over 22.5 per cent, which is higher than returns from other assets.
"Normally, investors know that the price of gold rises when stock prices fall, but this year it is completely different because mutual funds increased their investment in the precious metal. This caused mass sell-offs in gold because mutual funds often take profit from the metal to compensate for the fall in stock price," she said.
She added that many analysts expected the gold price to hit $2,000 per ounce by the fourth quarter of this year as demand for the precious metal in India and China often rises during this time, adding that the price of gold is expected to hit $2,200 per ounce next year.
"Factors that boost the price of gold are central banks' relaxed monetary policies, governments' moves to stimulate the economy and the US-China conflict, while factors that pressure the metal price are Covid-19 vaccine development progress, signs of the US economic recovery and mass sell-offs to compensate for loss in other assets," she added.
