America has been undergoing challenges since the beginning of the year that have greatly impacted on the country’s economy and thus hindering the U.S. dollar.
The United States is currently the most affected country by the coronavirus, on top of being deeply shaken by social riots – its currency, the dollar, is at its lowest since 2018.
An opportunity has risen for investments in gold and the euro currency. With a very uncertain presidential campaign, the U.S. dollar is set to lower even more in the next few months.
Dollar falls due to COVID deaths
Since the beginning of the COVID-19 crisis, the United States has numbered more than 160,000 deaths, which represents about 24% of the global number of cases.
On August 1st, the country was counting 1,000 deaths for four consecutive days, according to the Washington Post.
According to numerous analysts, confirmed by the FInancial Times, “Dollar sinks to two-year low over US virus toll concern over US virus toll” and has lost 3% of its value since July 1st.
Moreover, ActivTrades analyst Ricardo Evangelista analyzed that “It is interesting to note the weakness of the greenback relative to risk currencies and safe haven currencies, which denotes investor concerns about the ability of the US economy to rebound”, he shared with French newspaper Le Figaro.
Read on Alvexo: “Investors have been Eyeing Hydrogen”
Euro Goes Strong
In this particular context, euro has been seen as a great investment, especially since European leaders Emmanuel Macron and Angela Merkel announced a “Covid kick-start” €750 billion plan.
Trade idea: Euro/ US dollar is going up: The Euro / US Dollar is showing good signs. The US is hit the hardest by Coronavirus and is still protesting the Black Lives Matter movement is still going on but The Euro/US dollar is going strong. https://t.co/N8sytnuDcU pic.twitter.com/5wUKgfquSO
— Trade Ideas (@AlezzTrading) July 24, 2020
As a result, the euro has reached its highest level for two years. “In afternoon trading, the euro was last up 0.37% at $1.1569 EUR=EBS, after hitting $1.1601, the highest since October 2018”, noted press agency Reuters.
In comparison, “The dollar is weak and the key reason for that is real interest rates in the U.S. are low and are promised to go lower,” analyzed Axel Merk, president and chief investment officer at Merk Investments in Palo Alto, California in an interview for Reuters.
Gold Price Reach New Highs
“Gold prices are solidly higher and hit another record high of $1,981.10, basis nearby August Comex futures, in early U.S. trading Friday,” according to Kitco News.
The price of gold is now trading above $1,900 for only the 4th day in history. It's important to remember that it's not the value of gold that's going up, but the value of the dollar that's going down. You now need over $1,900 to buy a single ounce of #gold.
— Peter Schiff (@PeterSchiff) July 24, 2020
French newspaper Le Parisien adds that gold’s price has soared by 27% since the beginning of the year, although its production has dropped by 1% and that its recycling has increased by 3%.
Last but not least, the yellow metal has gained more than 10% in July, confirming its safe investment status.
The above content is considered to be market commentary information and shall not be perceived as independent investment research or investment advice.