Delta fears are good for gold – expect prices to rise

There are growing fears that the Delta variant could seriously set back economic recovery hopes as cases continue to rise and whispers of new shut downs begin to emerge. The variant now accounts for the vast majority of cases across the UK and EU and is quickly spreading across America.

With US infectious disease experts warning this week that the spread of the variant means that the vaccination figure required for herd immunity has now increased from 50% to 90% of the population, mask mandates are now being reinstated across the US. Markets are growing increasingly concerned about what this means for economic recovery, which could propel gold to a steep upward trajectory in short order.

Nicky Shiels, group head at PAMP Group said that it’s just a matter of time before gold prices take off, explaining “The excitement/risk-on exuberance behind the massive vaccine rollout globally is being walked back, which ultimately could be a positive catalyst for gold. Not because of fear (risk markets are largely over and immune to the various waves and variants), but because of the post-Delta liquidity implications & expectations and potential policy missteps concentrating a bigger gov.”

Commodity strategists from TD Securities said, “Fears of a spreading Delta variant across the globe are driving fears of stagflation, with the infections potentially denting growth without wiping out supply-side inflationary forces.”