Gold was dormant for a long time. But the price of precious metals has been rising steadily for around a year. How far can the rally carry the gold price?
The gold price is considered one of the profiteers in the financial market. Since its 52-week low at $ 1,289.05 in May 2019, gold investors have had a positive performance of more than 30 percent in their portfolios. The prospects for a continuation of the rally are good, because nothing has currently changed in the positive gold market environment.
Safe port effect drives the gold price further
The Corona crisis continues to have a firm grip on the markets. Even if the stock exchanges have apparently already shaken off the pandemic shock: the consequences for the global economy will be clearly felt in the foreseeable future. In order to cushion the expected economic burdens, central banks worldwide have pumped money into the markets to an unprecedented extent and caused a flood of liquidity. Interest rates are likely to remain at a low level for a long time due to the weakening economy. Good news for gold, because the yellow precious metal is a profiteer in this market environment.
In addition, the demand for gold has increased significantly in recent months. The temporary paralysis of supply chains – due to lockdown measures around the world – triggered a kind of FOMO effect. Many investors who registered the strong demand for the precious metal and at the same time recognized that the supply situation could be problematic, at least temporarily, were afraid of not being on board when the gold rocket took off.