Experts are unanimous that the value of gold will increase as well as the interest of the investors and the need for a protective asset will reach unthinkable limits. Precious metals market strategists along with traders support these sentiments.
Gold is almost the only asset that is not afraid of price fluctuations or global cataclysms. As a rule, the downturns in the precious metals market are temporary and the surges cause unprecedented enthusiasm. Currently, gold forecasts are optimistic despite the height of the COVID-19 pandemic. It is not surprising to know if the investors prefer yellow metal along with the dollar, since both are proven to be traditionally protective assets. In fact, analysts see that the price of the gold will exponentially rise amid the current crisis conditions.
Experts recall that the dynamics of the price of gold depends on the exchange rate of the greenback. Gold and greenback have an inverse correlation, that is, if the greenback decreases, the cost of precious metals increases, and vice versa. However, the possible fall of the greenback is not enough to drown the gold, and the temporary collapse of its price will not violate the harmonious picture of moderate growth too much. Many experts are confident that gold is immune to any crisis. Currency strategists of the precious metals market are positive about its future prospects since, in the conditions of the spread of coronavirus, it will continue to remain a protective asset for investors.
According to current forecasts, the precious metals market will receive support from geopolitical and fiscal decisions of government circles. Experts are sure that a possible price correction will not harm the gold. If it drops to $ 1,650 per ounce, this mark will remain a reliable level of support. At the beginning of the week, the spot price of gold was $ 1,678 per ounce, an increase of 11% since the beginning of this year. On Thursday, April 23, a key precious metal is trading in the range of $ 1751– $ 1752 per ounce, gradually gaining momentum.
The current situation gives analysts a reason for optimism. Currency strategists at Bank of America revised their 18-month gold outlook to improve. Experts expect a gradual increase in the price of precious metals, where, in 2020 it will run at around $ 1,695 per ounce, in 2021 it will rise to $ 2,063, and in a year and a half will reach $ 3,000. The bank does not exclude explosive price increases at any stage.
Bank of America recalls that gold has shown quite positive dynamics since the moment when the Federal Reserve changed its monetary policy in January of this year. The cause of the radical changes was due to the threat of the COVID-19 pandemic. The regulator had to lower rates to zero, introduce a limitless purchase of assets, and initiate ambitious plans to support the US economy. The Fed's aggressive moves jeopardized further dollar growth and triggered volatility in the precious metals market, but now key protective assets are on the way to equilibrium. According to analysts, the actual doubling of the balances of leading central banks and budget deficits in developed countries in order to mitigate the effects of the pandemic will help gold growth.
According to Peter Grosskopf, managing director of investment company Sprott Inc., today the yellow metal is a unique financial tool to help survive the current crisis with the least loss. Investors have long begun to shift their capital to gold amid a planetary rampant coronavirus infection, and this step was the most correct. Now it remains to wait for the price of precious metals to rise to $ 3,000 and higher, in order to finally establish themselves in the correctness of such a choice, analysts summarize.
