The current market for gold trading is volatile. The year 2020 can be described as anything but a stable year. The global Covid-19 pandemic; the stock market’s historic Black Monday and Black Thursday; the Russo-Saudi Arabian oil price war; the ongoing Brexit saga; and a rather hectic US presidential election – a lot has happened over the period of this one leap year that isn’t even over yet.
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Looking up to gold in uncertain times
With ongoing economic uncertainty and other political-related issues, gold has become a go-to asset for many investors looking to reduce the risks and diversify their portfolios. But the question now is: after setting fresh records this year, will gold prices go up past $2,000 per ounce once again any time soon? Should you stock up on this precious metal heading into 2021? The current times might be seeing a dip in the prices of gold but the future looks promising is what the analysts say.
Factors that’ll drive growth in the gold market
In the current situation of monetary easing, we have seen investors making a shift from the US dollars to gold as the hedge against inflation, also adding to the value of the precious metal which fits in the criteria for the growth of the gold, particularly in the financial market.
Now again the question that could agitate any new investor is, Will the price go up and beyond what has been expected from the market?
To sum it up, if the global economy continues to stagnate due to the pandemic, and rising geopolitical tensions impact already disrupted international trade, we might see the price of gold climbing higher and even breaking its previous records.
Another important factor that will determine gold prices in the future, at least in the near term, is the coronavirus itself. The second wave has already hit the world, with the number of cases rising daily and many countries have again gone into complete lockdown, which is directly weighing negatively on already struggling economies. If governments decide on a fresh dose of fiscal and monetary stimulus, the yellow metal could continue being the big beneficiary of the Covid-19 crisis.
How has been the year 2020 for gold trading?
The gold prices saw a hike after it touched $2075 an ounce over the summer and later the price of gold has fallen to below $1850, a fall of 10.8% which is noticeably a major low in the current times.
There are several reasons for this, primarily the lengthy delay in a fiscal stimulus package in the US and, more recently, Pfizer and Moderna’s dual vaccine announcements.
Pfizer has announced a success rate of more than 90% for its Covid-19 vaccine, while Moderna has announced the successful trial of a vaccine with a 94.5% success rate. This has added to hopes of a V-shaped recovery for the global economy.
Analysts at Morgan Stanley have said that increasing clarity about the coronavirus vaccines, along with continued economic stimulus policies, provide a favorable environment for rising stock markets, increasing credit, and an overall rosy picture for 2021.
But the overall studies are showcasing a positive growth in the yellow precious metal which will make it once again reach its highest levels above $2000 again, especially when new economic stimulus packages are approved by the US government.