Gold price increases more than 30% since the beginning of 2020
Tashkent, Uzbekistan (UzDaily.com) -- Against the background of the COVID-19 pandemic and the global economic recession, gold prices continue to grow rapidly, breaking the US$2,000 mark per troy ounce. Since the beginning of the year, the price of gold has increased by more than 30%, and in July - by 11%.
Investors are convinced that the "price rally" in gold will continue. Citibank predicts an increase in the price of gold to US$2,050 by the end of September. Bank UBS believes that gold in the near future may reach the level of US$2,300 per ounce. Bank of America’s target is US$3,000 over 18 months.
There are also bolder forecasts among economists.
In particular, EuroPacificCapital notes that if we start from the ratio of the DowJones index and the cost of gold, then the price per ounce should be at the level of 15 thousand dollars.
According to the World Gold Council, the precious metal is being bought for investment purposes as the volume of jewelry purchases and the rate of accumulation of gold reserves by central banks have slowed.
The following factors are highlighted that support the growth of the gold market.
1. Expansion of monetary stimulus programs by leading financial regulators. In particular, the allocation by the US government of an anti-crisis package in the amount of US$2 trillion intensified capital outflow from the depreciating dollar to more attractive gold.
2. The growing second wave of COVID-19, as well as the aggravation of the geopolitical situation in the world. Raiffeisenbank believes that amid the ongoing trade conflict between the United States and China, gold is becoming a protection against a possible blocking of dollar settlements.
3. Decline in real interest rates and a weakening of the US dollar. As noted by Moody’s, soft monetary policies in all countries, zero or negative interest rates, fears of inflation and dollar depreciation, unclear prospects for recovery of key economies will continue to support the rise in gold prices in 2020.
On the whole, experts are optimistic about the prospects for further growth in gold prices, which is one of the best defensive assets in the face of the growing crisis around the world. The slowdown in price growth or even the reverse process - gold sales - experts expect not earlier than the start of mass vaccination against coronavirus.