'Gold' Aiming for All-Time High, 'Silver' Rising with Renewable Energy

Gold Continues Rising Amid Safe-Haven Demand
Gold Price Forecasted to Reach $2000 per Ounce Within Months
Silver Also Expected to Strengthen Due to Renewable Energy and Supply Issues

[Asia Economy Reporter Naju-seok] As gold prices continue to show strong momentum day after day, analysts say it is only a matter of time before they reach an all-time high. Silver prices have also risen to their highest levels since 2016.

On the 20th (local time), the August delivery gold price on the New York Mercantile Exchange closed at $1,817.4 per ounce, up 0.4% ($7.4) from the previous trading day. This is the highest level since it recorded $1,820.6 per ounce on the 8th of this month. Gold prices have risen more than 19% this year alone as the novel coronavirus disease (COVID-19) swept across the globe, leading gold to be regarded as a "safe-haven asset."

Attention is focused on how long the gold price rally will continue. Experts analyze that considering the accommodative monetary policies of central banks worldwide, low government bond yields, and the inflow of funds into gold ETFs (exchange-traded funds), there is still room for further price increases. According to BlackRock, the world's largest asset management firm, $12 billion (approximately 14.38 trillion KRW) has flowed into gold ETFs. Citigroup predicted in a report on the same day that "gold prices could exceed $2,000 per ounce within 3 to 5 months." Ed Morse, Citibank's global head of commodities, also forecasted that "it is only a matter of time before gold prices hit an all-time high." This view aligns with Goldman Sachs' earlier prediction this month that gold prices would surpass $2,000 per ounce. Bank of America has even suggested that gold prices could exceed $3,000 per ounce.

In particular, there is growing analysis that gold prices are beginning to show a different pattern than before. Cameron Alexander, a consultant at market information firm Refinitiv, pointed out, "Gold prices typically rise on uncertainty, but recently they have been strong even as the stock market shows strength." Investors usually buy gold when the stock market is unstable, so the recent increase in gold investment despite a rising stock market is seen as a departure from previous trends.

Silver has also started to attract attention. On the same day, the September delivery price rose 2.2% ($0.43) to $20.192 per ounce. Silver prices exceeding $20 per ounce is the first time in four years since August 2016. The price ratio between gold and silver has narrowed from 120 times in March to 90 times recently.

Experts believe that industrial demand, in addition to silver's value as a safe-haven asset, will be a driving factor behind its strength. According to investment bank Morgan Stanley, industrial silver demand accounts for 85% of total demand. Silver is widely used in renewable energy sectors such as solar power, and with global interest in renewable energy increasing after COVID-19, silver's value is expected to be highlighted.

There is also analysis that concerns over silver supply have stimulated prices. Credit rating agency S&P pointed out, "Latin America is a major silver-producing region, but severe COVID-19 impacts could affect silver production and related activities."