In the article today will offer a focus on the favorable forecasts of gold, which is preparing to record a new boom on the market. For any information on the coins, gold investment, we suggest you visit the appropriate section of the site that is updated daily.
GOLD, THE FED AND CURRENCY, TO A NEW BOOM OF THE PRECIOUS METAL?
Up to now, from the beginning of 2020, the price of gold has seen an increase of about 13%, reaching the altitude of 1720 dollars an ounce, +200 in about six and a half months. At the same time the us dollar against other major currencies, starting from euro – stay on top of the quotations of the beginning of the year, although I have folded in part from the highs reached in march.
Usually, the appreciation of the gold goes to the weakening of the dollar, except when the precious metal is drawn from the global financial crisis or geopolitical, as is happening in these months for Covid-19. The market is being pushed to buy, then, both the metal, and the bond, they are perceived as safe.
The Federal Reserve in recent days, has not ruled out putting a limit to the yield of government securities, after having put on the market about 3,000 billion dollars in three months.The last time this happened was in 1942, during the Second world war, when the FED stared to 0.375% of the maximum yield for the bond is american in three months and to 2.50%to 25 years.
The us public debt is expected to increase this year to 130% of GDP, and then, with the returns of the americans under inflation, investors may look for other harbours with respect to the bond of the FED. Therefore, the possible weakening of the us dollar compared to the euro, the yen, the pound could give new impetus to gold, who already today see the value on the all-time highs. The gold, especially if purchased in euro or in other currencies would become affordable proving, as always, a safe haven for investors.
Also once you have finished all the health emergency, finally, to a greater extent, the gold will be a retreat from stocks and bonds whose reliability has already now, in many cases, the mass is in doubt for the foreseeable consequences of long-term economic emergency Covid-19.
A second aspect to consider is that the pandemic disrupted the supply chain of gold like no other event in modern history. From mining to consumption, all the elements of the chain are damaged.
The activities of extraction and recycling of gold have been reduced because of the restrictions of the block in the first quarter and part of the second. The decline was, however, modest compared to the scale of the disruption for other industries at the global level. In addition, a number of refineries have stopped the activity and the transport of physical gold is decreased because of the reduction of commercial flights.
The emergency Covid-19 has also led to uncertainty among investors for a perspective of anemic growth, thus generating an increase in investment demand in gold in the first quarter. These elements all combine to present a new, significant increases in the price of the precious metal.