Central banks can print the money, but not forever

22 / 04 / 2020
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Gold has seen strong growth momentum after traders sought refuge in gold as oil prices have fallen sharply in recent days. Demand for safe harbors continues, intensifying the oil collapse. In 2020, the price of WTI oil fell by 67% and Brent oil fell by 73%. Oil-producing countries whose currency correlates with the price of oil are likely to seek to be less dependent on oil development, diversify their foreign exchange reserves and obtain physical gold, as do the people in these countries.

 

As central banks increase their balance sheets to curb economic downturns, a number of risks could be effectively socialized, increasing the attractiveness of gold. Based on this, the target price of gold, according to Bank of America, increased from $ 2,000 to $ 3,000 per ounce at the 18-month horizon.

 

The current positive correlation between stocks and gold is a possible sign that stock markets may not have reached their bottom and the gold market still has a lot of room for growth. The trigger could be a persistent pandemic and the associated possible extension of blocking restrictions over the next few weeks.

 

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