12.07.202111:35 Forex Analysis & Reviews: Can gold rise to $4,000?

Last Friday, gold bars ended in positive territory, which helped them to record the third weekly increase in a row. Also, this increase was the fastest in the last 7 weeks - since the beginning of the seven-day period, which ended on May 21.

Before the weekend, the main precious metal rose by 0.6%, or $10.40. As a result, its final value on the New York COMEX Exchange was $1,810.60.

The catalyst behind the increase in the attractiveness of gold were the volatility of the US stock market, the weakening of the US currency and the decline in government bond yields to the lows of February. They were put under pressure by growing concerns about a decline in the pace of economic activity in the world.

The main obstacle of overcoming the protracted coronavirus crisis is now an increase in the incidence of COVID-19. Moreover, the biggest concern is caused by new mutations of the virus that are more infectious than previously known strains.

The global economic recovery is also being undermined by limited access to the vaccine in developing countries and the low effectiveness of existing drugs against new variants of COVID-19.

Analysts emphasize that the next wave of coronavirus panic is beneficial for gold, which is traditionally considered by investors as a safe haven asset. Meanwhile, risky financial instruments, such as securities, on the contrary, suffer and fall in price.

This happened, for example, last Thursday, when 3 major US stock indexes collapsed to 3-week lows. This decline gave reason for reflection: some experts do not believe that the US market will be able to recover.

So, the well-known commodity analyst Peter Grandich joined the camp of skeptics. He has no doubt that now the securities market is in the stage of a "financial bubble", and the United States in the next 2 years will repeat the Japanese scenario of the 1990s, when explosive growth was replaced by a stage of stagnation.

"Over the next two years, there's a possibility that we will suffer a decline that will surpass or equal some of the worst declines ever in the history of the U.S. because that's how far advanced I think this bubble is," the expert believes.

Grandich himself intends to keep most of his own savings in cash until the end of 2021. In his opinion, this way he will be able to invest profitably at the moment when the price of promising assets falls.

Meanwhile, the analyst is very optimistic about gold. Unlike the experts of The Goldman Sachs, who do not see the long-term growth potential of the yellow metal, Grandich holds the opposite opinion.

He is sure that gold is the most reliable asset in times of stagnation, as it allows you to save capital. For this reason, the expert recommends investing in bullion at this stage, and not in American stocks, even though their profitability may exceed the value of the precious metal.

According to Grandich, in the long-term future, the price of gold may jump to levels that are now perceived as far from reality. We are talking about $3 thousand and even about $4 thousand per ounce. However, over time, these figures will no longer seem fantastic and will be considered the norm, he notes.

In the meantime, gold cannot boast not only such high indicators, but even an upward movement near the marks reached at the end of last week. On Monday morning, the asset moved to a decline as part of a correction.

So, (at the time of preparing the material) the quotes fell to $1,801.25. Compared to the previous close, the precious metal fell by $9.35, or 0.51%. Silver also fell in price. The asset sank by 0.61%, dipping to $26,075.

The main pressure on the precious metals market on July 12 is exerted by the growing exchange rate of the US currency. In the morning, the dollar index reached 92.19 points, strengthening against its competitors by 0.07%.