Gold prices managed to break the resistance and return above $ 1,700 an ounce. To record prices at 12:31 KSA $ 1,714 an ounce for future transactions. And gold rises in the spot transactions price of $ 1,704.14 an ounce.
During the first half of the year the luster of gold increased. Profits continue from the beginning of the year to today with a percentage of two-digit numbers. During times of uncertainty, gold outperformed risk assets. On May 29 of this year, gold profits from the beginning of the year to the date were 13.94%. The rise in gold came strongly against the backdrop of the strong easing measures from central banks, which caused the devaluation of currencies. Historically, that environment is suitable for increasing the luster of gold, because the world sees it as a store of value. The positivity of gold increases in light of the negative yield rates of bonds, and the weak relationship of gold with other assets.
However, the gold did not have a smooth climb, and there was volatility, to move the gold between strong and weak performance. This is in line with what happened to gold in the midst of the global financial crisis. In 2008, at that time, liquidity forced market participants to sell gold to cover their losses, before returning to possession of gold, and the precious metal entering its upward trend..
Not only does gold in 2020 receive support from the features of a potential economic recession, but there is a trade war between the United States and China, which is reigniting. There is also a supply chain hit that may restructure it, moving away from globalization a little, which will create a less inclusive economy and in light of these crises, uncertainty seems to be the only thing that markets trust.
The demand for gold is different this year from what we saw earlier. The World Gold Council says in its report that the demand for gold jewelery during the first half of 2020 was the lowest in 10 years, while the investment demand for gold was the highest since the first quarter in 2015. Initial data indicate that the second quarter of 2020 will be a continuation of this trend, The consumer demand for jewelery continues to decline, as the flow into gold-related investment funds continues.
On May 29, 2020, the S&P Gold Producer Index increased by 16% from the start of the year to its date. This activity attracts companies, with mergers and acquisitions due to the lack of large-scale exploration of gold, it takes 15 years to reach a new gold mine. As the exploration activity decreases due to the outbreak of the Coruna virus, the supply of gold decreases. For the fifth consecutive quarter, gold mining activity recorded a decline even before the epidemic.