Gold could soar to new record high, Citigroup says

Gold could soar to new record high, Citigroup says

Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.

During the 2011-12 rally, when gold touched its current record of $1,921.17 an ounce, "along with this recycled gold also came increased diamond recycling", Ehrlich said. Gold prices was at their lowest since August 13 at $1,483.90 in the previous session.

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Given that gold has had such a deep correction from its recent peak, investors are buying on dips, Yan added.

Low or lower-for-longer nominal and real interest rates; global recession risks - exacerbated by U.S.

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"For now, the USA consumer and potential growth story is holding up", Citi said in the note.

ECB policymakers are leaning toward a package that includes a rate cut, a pledge to keep rates low for longer and compensation for banks over the side-effects of negative rates, five sources familiar with the discussion said last week. "That probably encourages central banks to remain dovish". Doshi notes that at the beginning of the year he predicted gold would hit $1,400 within six months-and it has.

Central banks including China, have used the trade war as an incentive to try and diversify their reserves, according to John Sharma, an economist at National Australia Bank, who told Bloomberg: "Gold provides an ideal hedge", during a time of political uncertainty.

Gold usually moves in opposite directions with the US dollar, which means if the dollar goes strong, gold futures will fall as gold, priced in USA dollar, becomes expensive for investors using other currencies.

Elsewhere, silver eased 0.1% to $18.14 per ounce after falling to a near two-week low of $17.89 earlier in the session. Platinum for October delivery was down 5.8 dollars, or 0.61 percent, to settle at 952.7 dollars per ounce.

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