What Are the Chances That Gold Can Sustain Its Current Breakout?

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Gold is a haven asset that traditionally has held its value over time and is seen by many as a hedge against inflation.

There are good reasons investors buy gold and silver to protect against high inflation damaging the value of fiat currencies and given the turmoil in crypto and stock markets.

Gold prices have been on a tear in recent weeks. This surge has fueled increasing demand from institutional investors and retail traders. Speculative trading has also played a role in pushing the price of gold, with some investors expecting it to reach record highs soon.

Gold (+1.7%) and silver (+5%) rallied sharply on Tuesday, mostly in response to the Bank of Japan’s (BoJ) surprise announcement that they would be changing their yield curve policy. This policy change is a move away from the zero interest rate policy, which has been in place for years and is expected to impact the Japanese economy and global markets significantly.

Fawad Razaqzada says, “I wonder whether the metals overreacted to the news. The BoJ’s decision has added to the hawkish ECB and FOMC meetings last week, which is why we have also seen European and U.S. yields climb higher. Rising yields are normally bad news for non-interest-bearing precious metals, but traders bought gold and silver anyway.”

The BoJ’s announcement sent shockwaves through global markets, with investors flocking to gold and silver as safe havens from the potential volatility that could potentially follow.

In addition to this news, other positive factors have contributed to the gold price surge. The U.S.-China trade war remains unresolved, leading to concerns about a potential global recession. As such, investors are turning to gold as a haven asset that will protect them against any sharp falls in stock markets or fiat currencies due to high inflation rates caused by economic instability.

With all these developments occurring at once and contributing towards higher demand for gold and silver worldwide, it remains to be seen whether these precious metals can continue their current breakout or eventually succumb to market forces and pull back in price again.

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