Gold is often considered one of the most popular risk-free assets. And its global prices are soaring reflecting mounting uncertainty in the global economy.
According to online business researcher investing.com, the price of gold has peaked at $1,300 per ounce in early January, the highest level in six months.
It is still low compared to when the price reached the $1,900 level several years ago, but market observers say there is room for a further hike in price.
Peter Schiff, CEO and global chief strategist of Euro Pacific Capital, said in a recent media interview that gold prices could increase further. Schiff is a renowned skeptic in the global economy, famous for forecasting the 2007 subprime mortgage crisis.
"I think this is going to be the perfect storm for gold," he said in an interview with metals market information provider Kitco News.
"The dollar is going to fall into a vacuum. I think the only buyer is going to be the Federal Reserve, but that just means that we have to deal with all the inflation that we're creating. As this reality rears its head, gold prices are going to start to rise."
Global investment bank giant Goldman Sachs agrees by recommending buying gold for the first time in five years.
Local futures trader Lee Sang-hoon said the recent development regarding the U.S. economy could raise high expectations about future gold prices.
"The U.S. dollar and gold prices are closely related to each other. If the greenback, which is considered to be one of the most reliable risk-free assets, becomes more valuable, investors won't buy gold bars because metal is not an interest rate asset," he said.
"The recent rally in gold prices reflects growing skepticism for the future course of the global economy. Even the U.S. economy is now believed to have reached its peak."
Kiwoom Securities analyst Yeom Myeong-hoon said gold prices could rise even further.
"Gold prices have stagnated around the $1,200 level for years," he was quoted as saying. "If the market becomes more certain the U.S. rates are at their peak, investment in gold could be a favorable alternative as a risk-free asset."
Now, there is a stream of signals that the U.S. rates have reached their peak and won't be raised any further.
"With the muted inflation readings that we've seen coming in, we will be patient as we watch to see how the economy evolves," U.S. Federal Reserve Chairman Jerome Powell said during the American Economic Association annual meeting, Jan. 4.
"We're always prepared to shift the stance of policy and to shift it significantly if necessary."
The remark came after a recent plunge in the U.S. stock market which drew criticisms from U.S. President Donald Trump who blamed Powell for "hunting the U.S. economy."