Gold has begun to appear to be a more appealing investment as politicians continue to disagree over raising the debt ceiling.
According to Bloomberg statistics, the price of the precious metal has been eerily close to its all-time high of $2,075.47 per ounce reached in August 2020. Gold is up 11% year to date and 25% from a November low, despite the recent pullback.
It is difficult to make specific forecasts regarding how a US default will affect the market because it has never happened before. But according to experts, gold will continue to be seen as a safe haven.
“I wouldn’t be surprised if we had a $100 move in gold prices,” said Edward Moya, senior market analyst at Oanda, to Insider. It’s a bit too close to call, but it’s clear that this would be a historic event that would up end much of Wall Street.
If the price of gold rose by $100 per ounce, it would surpass the previous record. It was trading at around $2,020 per ounce on Friday.
The time remaining for lawmakers to reach a compromise to raise the debt ceiling may be getting short. As soon as June 1, according to Treasury Secretary Janet Yellen, the government will be broke.
RBC Capital Markets stated in a report on Friday that the protracted impasse may pave the way for gold to gain in the near future.
“Even if an agreement is finally struck, we wouldn’t rule out the possibility of increased financial anxiety as the deadline draws near. In such a case, gold appears to be one of the few potential candidates who would be required to absorb the ensuing market movements, according to expert Christopher Louney.
Later, he continued, “In the near term, we believe gold looks like the best hedge in the more immediate offing.”