Jakarta, CNBC Indonesia – World gold prices fell slightly in trading this morning. The strength of the United States dollar (US) has limited the space for rising gold prices.
On Wednesday (21/7/2021) at 07:31 WIB, the world gold price on the spot market was recorded at US$ 1,080.84/troy ounce. Slightly down 0.07% from the previous day.
The strengthening of the US dollar exchange rate makes gold powerless. At 07:32 WIB, the Dollar Index (which reflects the position greenback against the world’s six major currencies) rose 0.1%. At 92.96, the index touched its strongest point in three months.
Market participants (and the rest of the world) are again made worried by the corona virus pandemic (Coronavirus Disease-2019/Covid-19). The emergence of the more contagious delta variant of the corona virus has caused the number of positive cases to climb.
As of July 20, 2021, the World Health Organization (WHO) recorded 190,671,330 positive corona patients in all countries. An increase of 390.026 people from the previous day.
In the last 14 days, the average number of positive patients increased by 478,864 people every day. An increase compared to the average of the previous 14 days, which was 386,811 people per day.
“Investors don’t dare to speculate. This is a driving force for the strengthening of the US dollar,” said Karl Schamotta, Chief Market Strategist at Cambridge Global Payments based in Toronto (Canada), as quoted by Reuters.
When the situation becomes very uncertain, when the world is again overshadowed by the threat of regional quarantine aka lockdown, then playing it safe is a very reasonable choice. There is even a tendency for investors to play very safe, namely by holding cash.
Not just cash, US dollars are the main choice. Because, the US dollar is a global currency that can solve all matters anywhere, anytime.
“The strengthening of the US dollar which is a safe asset (safe haven) is normal. Now the outlook for world economic growth is questionable,” said Juan Perez, Washington-based FX Strategist at Tempus Inc.
Gold and the US dollar have an inverse relationship. This is because gold is a commodity that is priced in the currency of Uncle Sam’s country.
When the US dollar strengthens, gold becomes more expensive for investors holding other currencies. The demand for gold falls, the price will follow.
Next Page –> Gold Prices Risk Avalanche This Week