Welcome to SurvivalBlog’s Precious Metals Month in Review, where we take a look at “the month that was” in precious metals. Each month, we cover gold’s performance and the factors that affected gold prices. This column by Steven Cochran is courtesy of Gainesville Coins
What Did Gold Do in August?
August was a volatile month for gold. Early in the month, gold extended a series of new all-time record highs that began on July 24th, when spot gold closed at $1,901.30 an ounce. Gold closed above $2,000 for the first time on August 4th, at $2,019.40. Prices hit the current all-time high of $2,063.20 an ounce on August 6th.
At this point, gold had set new all-time highs nine times over the last ten trading days. Spot gold had rallied for 17 out of 19 sessions from July 13th, to August 6th, going from $1,801 an oz to $2,063 an oz.
This spurred talk around our office that gold was overdue for a correction. The excuse for that correction showed up the next day.
The nonfarm payrolls report for July was released on August 7th, showing more new jobs than expected were created. Stocks rose on the good news. It also gave support to the US dollar, which had been at two-year lows. Spot gold fell $28 from its record high that it had scored the previous day. Treasury yields rose, as investors cycled into risk-on assets..
August 11th saw the largest dollar-wise daily loss for gold in seven years, as President Vladimir Putin shocked the world with the announcement that Russia had developed a COVID vaccine. Putin declared that the vaccine was safe, and that mass inoculations would begin in October.
The prospect that the global COVID epidemic might end before the end of the year sparked an abandonment of safe-haven assets of all types. Spot gold fell $118 an ounce to $1,910.00. This would be the monthly low. December gold futures fell $93 an ounce, but would not see its monthly low until August 25th.
Gold ground its way back to $2,000 by August 18th, before selling off to $1,946 over two days. Spot gold spent the last week of August fighting a $45 losing streak as it tried to avoid ending lower for the month.
Spot gold as tracked by XAUUSD lost 7% in August. This follows an 11% gain in spot gold prices in July, which was the largest monthly rally since 2012. Year to date, gold was 29.7% higher by August 30, and 28.88% higher year over year.
Most of the correction in gold prices that we saw in the last half of August were from speculators taking profits, and “weak hands” that bailed at the first sign of a correction.
Many gold market analysts agree that all markets will suffer from increased volatility at least through the end of the year. This makes daily swings of more than $100 more likely.Continue reading“August 2020 in Precious Metals, by Steven Cochran”