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Recent global economic concerns and stock market volatility appear to have increased the demand for gold as a safe haven. The price of the precious metal has reached its highest level since June in yesterday's trading session.
Investors are turning to the historic value deposit in increasing numbers to protect their wealth from geopolitical tensions. Even the recent news that the use of gold in the manufacturing sector may be in decline, has not diminished the appetite for greater diversification of investors.
Gold prices rose more than 4.87% last month
Since November 27, the price of gold has risen from just over $ 1,211 an ounce to the current price of nearly $ 1,270. This represents an increase of 4.87% of the price of the precious metal.
In a note to customers and investors, the MKS PAMP Group – a supplier of precious metals products and services based in Switzerland – stated:
"Gold continued to rise steadily until December … On the low side, there seems to be good support at $ 1,265 and we expect a lot of buying interest around the 200-day moving average for $ 1,251 ".
According to a Reuters report, much of this increased buying pressure has been driven by geopolitical tensions that threaten to disrupt global markets, along with stock price uncertainty.
A report by the Wall Street Journal states that the Dow Jones Industrial Average, S & P5600 and Nasdaq Composite fell respectively by 1.1%, 1% and 0.9% after a short rebound on Wednesday . This brief recovery comes after almost a month of decline for stocks in general.
Sugandha Sachdeva, vice president of metals, energy and currency research at Religare Broking Ltd., spoke about the growing demand for gold:
"Gold prices are mainly receiving support thanks to the purchase of a safe haven due to the health concerns of the global economy and the increased volatility of risky assets".
The demand for gold is not reflected in the bitcoin market
The price of gold is increasing, despite recent reports from Chinese scientists who succeed in creating a substitute for the historic deposit of value that serves many of the same industrial purposes as metal, but does not seem similar enough to counterfeiting. Based on the value theory offered by both gold bugs and many Bitcoin Cash advocates, the price of gold should be lowered in line with its sudden usefulness. Evidently, this was not the case.
It seems that the properties of a known and controlled supply and the inability to reproduce gold are sufficient to be considered a reserve of adequate value for global investors. It therefore seems strange that Bitcoin, which is an even stronger form of currency than the yellow metal, has not seen a similar increase in demand.
With increasing evidence suggesting that utility is not really a prerequisite for value, it seems only a matter of time before Bitcoin can provide a safe haven unrelated to those wishing to protect their wealth from tensions geopolitics and uncertainty in the stock market. After all, the most popular digital asset by market capitalization, hashing power, and overall adoption is even scarcer than gold, while offering greater functionality in terms of acquisition, storage and transfer.
Related reading: Crypto Economist Claims Bitcoin is the "medicine you need"
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