The price of gold grew to $1,935 per troy ounce this week, according to COMEX data.
This is an absolute record over the entire history of trading beating the previous record of $1,920 per troy ounce set in September 2011.
As market participants note, this recent surge in the price for the precious metal was caused by massive injection of money into economies by world central banks resulting in many assets losing their value while gold remains a “safe harbor.”
“Indeed, currently we have historically high prices of gold which prompts a discussion of reasons behind this development,” says Dmitry Tolstyakov, investment expert and founder of the FIN-RA Safe Investment School. “The main reason why gold prices are growing is the general instability in the world. It is the lack of understanding how the pandemic will eventually affect business and economic development of countries. Gold remains a safe harbor for investors; therefore, both corporations and private individuals are actively buying gold during this period of uncertainty.”
Reportedly, Russia is currently selling rather than increasing its gold reserves. The expert noted that before the pandemic, Russia exported significant amounts of this precious metal. In 2019, it set a record for the gold exported to the United Kingdom as London is the global center of gold trading.
“During the pandemic, the situation became worse due to very low oil prices. Gas exports in April in May generated lower revenue than gold exports. Moreover, the state needs foreign currency to continue spending the budget and delivering on national programs; therefore, the lost oil and gas revenue needs to be compensated and it is rather well compensated by gold. Gold is in abundance because the state has accumulated reserves and is now mainly selling its domestic production. My opinion isnthat this is a justified strategy which is also supported by high gold prices,” Dmitry Tolstyakov concluded.