At this time when the Covid-19 pandemic has pushed the global economy into a contraction mode, why are the gold prices continuing its dream run. Why are the gold prices maintaining its upward momentum?
Normally gold prices rise whenever there are tensions globally. When the U.S. ordered China to close its Houston consulate, amid rising tensions between the two, it set a perfect stage for a further boost to its prices.
Gold in normal times is used as a hedge against inflation. It attracts flows when the economy is down and also amid falling interest rates. Its prices reflect the beliefs of commodity traders.
Investors are buying gold not only as protection from an economic crisis. More investors are flocking to gold because of prevailing uncertainties elsewhere. Whenever stock markets, real estate and bond markets fall across the world, investors turn to gold to park their funds. The result, we are already at a nine year high price of gold.
There are already expectations of an additional round of fiscal stimulus. This could lead to further weakening of the dollar. And a weak dollar is supportive of commodities like gold and silver.
Another important factor contributing to its robust performance is its availability. The supply growth of gold has changed very little over time. It has increased by approximately 1.6 percent per year over the past twenty years.
Prices of gold are considered a barometer of our political and economic state. Gold has been established as an investment, a reserve asset and is highly liquid. It has historically preserved its value over time.
Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.