Jakarta, CNBC Indonesia - The price of gold has slowly started to climb again since last Wednesday after dropping more than 5% on Tuesday (11/8/2020). In trading on Thursday (13/8/2020), at 16:43 WIB, the price of gold was traded in the range of US $ 1,930.64 / troy ounce, up 0.6% in the spot market, according to Refinitiv data.

At the same time, the US dollar index (US) also declined on Wednesday.

Refinitiv data showed that the index, which measures the strength of the US dollar, was at the level of 93.155, weakening 0.31%. Wednesday, the US dollar index weakened 0.2% while gold rose 0.34%.

The discussion on fiscal stimulus that has stalled again in the US Congress (Parliament) is the cause of the weakening of the US dollar index again.

Without additional stimulus, the US economic recovery will certainly proceed more slowly. The Republican stronghold of the House of Representatives (one of the two chambers that make up the US Congress) is proposing a new stimulus proposal worth US $ 1 trillion. But the opposition Democrats were reluctant to agree because they felt there were too few of them.

Steven Mnuchin, US Treasury Secretary, said that the new Democrats want to open up space for dialogue if the value of the fiscal stimulus is at least US $ 2 trillion. President Donald Trump is outraged.

"The US dollar needs positive news from discussing the stimulus. There will definitely be an agreement, because politicians are unlikely to return to their constituents empty-handed. When that happens, the US dollar will have momentum to strengthen against other currencies," explained Masafumi Yamamoto, Chief Currency Strategist at Tokyo-based Mizuho Securities, as quoted by Reuters.

The decline in the dollar index is one of the "fuels" for gold to accelerate this year. In fact, last week when gold broke record highs, the main trigger was the dollar index which fell to its lowest level in more than 2 years.

With the dollar index dropping again, will gold tread the path to another record?

Carsten Fritsch, analyst from Commerzbank as quoted by Kitco, said that the sharp correction in gold that has been waiting for has finally begun, but do not be afraid because the world gold price rally will resume, he said.

The rebound in gold has indeed been seen since yesterday, but other analysts see that the volatility of gold will still be high going forward.

"Gold is in a position that has never been reached before, yesterday's sharp decline indicates that volatility in gold prices is likely to continue in the foreseeable future," said Vivek Dhar, a mining commodities and energy analyst with the Commonwealth Bank of Australia in a note quoted by CNBC International. .

High volatility means that world gold prices will likely still fall sharply, but it does not rule out the possibility of bouncing back.

So far, there has been no change in projections from analysts. The world gold price is predicted to continue to strengthen.

Barry Dawes, from Martin Place Securities, projects that in the next two years the price of gold is said to reach US $ 3,500 / troy ounce.

Ole Hansen, Chief Commodity Strategist at Saxo Bank, predicts gold will set a record high next year, and long-term gold will reach US $ 4,000 / troy ounce.

Another analyst, Jurge Kiener of Swiss Asia Capital is even more bullish. Technically, he sees a chance that gold will reach US $ 8,000 / troy ounce. Meanwhile, Dan Olivier, founder of Myrmikan Capital, predicts gold will reach US $ 10,000 / troy ounce. Although it is not stated when gold will reach the level which currently looks extreme.

Given the recent developments, the strengthening of gold is likely to follow a steep path after signs of a revival in the US economy and the latest vaccine developments.

The more signs of a revival in the US economy, the heavier the rate for gold to continue to rise. Especially if the corona virus vaccine is actually found it will become a game changer, instead of buying, traders and investors will likely sell gold.

Yung-yu Ma, head of investment strategy at BMO Wealth Management, said there are 2 factors that will make gold change direction, namely vaccines and the US Presidential Election in November.

The effect of the Election is said to depend on how the outcome is, while If there is a positive development of the corona virus vaccine, he sees gold going down to US $ 1,600 / troy ounce after the US election. But he also said gold would rally again next year.

Antam's gold

Domestically, the price of gold bullion produced by PT Aneka Tambang Tbk or commonly known as Antam's gold strengthened on Thursday (13/6/2020), after falling sharply on Wednesday's trade. Despite the strength, the storm for precious metal prices is still not over.

Based on data from the official website logammulia.com, 1 gram of gold bullion last Thursday was priced at IDR 1,028,000 / stick, up IDR 2,000 or 0.19% from last Wednesday which fell Rp 30,000.

Meanwhile, 100 gram gold bars, which are usually used as a reference, were valued at IDR 97,012,000 / stick or IDR 970,120 / gram, an increase of IDR 0.21% from Wednesday.

The strengthening of Antam's gold price followed the world gold price which managed to rebound after collapsing in trading last Tuesday.

Based on Refinitiv data, the world gold price rose 0.31% on Wednesday, while the previous day it dropped 5.72% which also caused Antam's gold price to drop by Rp 30,000.