Gold is approaching its all-time highest price following a significant turnaround in the past few days. The asset is on an ascending trajectory and is well on its way to its own quotation historic high of $ 1,870 per ounce recorded in September 2011.
Gold recovers after its sharp drop in price
Gold underwent a turbulent early 2020 where its earnings were quickly wiped out as financial markets struggled and continue to struggle to cope with the Covid crisis19. The precious metal opened the year trading at $ 1,520 an ounce before quickly rising 10% to $ 1,672 at the end of February.
Since then, gold has gone through complicated phases and has seen its value drop to an annual low of $ 1,479 in mid-March following a sustained asset selloff. The drop in gold prices is related to that of risky assets which leads investors to question their ability to react to the rigidity of the financial markets.
However, gold remained true to its safe haven status after reversing those losses when its performance separated from the conventional market. The asset gained 9% this week alone to jump to $ 1,620 on March 24 from its valuation of $ 1,484 at the close of the market on Friday March 20.
A large percentage of precious metal earnings were recorded on March 23 after the Federal Reserve announced new monetary policy interventions. The news of an imminent $ 4 billion liquidity injection triggered the surge in gold prices.
Investors consider gold a safe-haven asset, therefore a reliable hedge to preserve the value of their investment.
Bitcoin reflects the performance of gold
Like gold, bitcoin has undergone an equally difficult path until its price has fallen by more than 50% due to the high selling pressure. However, the digital asset has proven resistant over the past two weeks, while other assets have continued to plummet.
Now investors expect the virtual asset to rise in tandem with gold and hit previous highs. Galaxy Nov's Mike Novogratz expressed these feelings via a tweet claiming that Bitcoin and Gold will behave similarly.
So far, both assets have shown similarities in their price developments as they continue to stand out from the performance of traditional financial markets. A continuation of this trend could cause gold and bitcoin to reach new historical highs, using in their favor all the chaos that is invading conventional markets.