Gold Prices to Continue Moving Higher

The price of Gold (XAU/USD) is likely to hit an all-time high within the next 18 months thanks to Brexit and negative global bond yields.

Even though the yellow metal is a non-interest bearing asset with no holding costs, gold is attractive in a climate when there is little trust in the establishment or its political or economic policies. This is demonstrated, no better, than the recent Brexit referendum vote that saw the “leave camp” win. This means the United Kingdom will be leaving the European Union.

Investors are continuing to witness the ever plunging bond yield rated throughout the world. This has blunted whatever advantage fixed income securities have ever had over gold.

The Falloff in Trust is Supporting Gold

There is a falloff in investor trust and confidence and they, the investors, are looking for a new way to invest their money. They are losing trust in the governments, who control the fixed income markets which have seen yields fall towards, and in some cases negative. In gold, there are no negative yields. There is no new supply or production to crimp price action. It is the ultimate safe haven.

At the time of this report, 1045 HK time, the yield on the benchmark US 10 year Treasury was down at 1.44 percent. The yield on the US 30 year bond was at 2.23 percent. As for spot gold prices (XAU/USD), the yellow metal was trading around $1,350 per ounce in Asian trade hours. The price of the yellow metal has risen about 27 percent year to day. In August of 2011, the price of gold hit an all-time high at $1,900 per ounce.

That price is not out of reach anymore.