Gold has stood resolute in the face of weaker than expected GDP data this week, further bolstering support for the precious metal and demonstrating once again exactly why it remains a safe store of wealth.
Economic data released yesterday (Thursday) underlined just what a toll the coronavirus shutdown had taken – the US Gross Domestic Product figures revealed a 5% decline in economic growth for quarter 1 of 2020. The 5% decline follows a 2.1% growth registered the previous quarter. The contraction was worse than expected, despite recognition that March would weigh heavy on the data, due to the widespread closures caused by the COVID-19 pandemic. The commerce department had expected a 4.8% decline.
As per CNBC, the current quarter is set to be worse – making now an opportune moment to buy gold. In its markets report the broadcaster wrote, “Economists believe the lockdown that shut wide swaths of the economy and triggered the layoffs of millions of workers will send the GDP sinking at an annual rate of 40% in the current quarter. That would be the biggest quarterly decline on records that go back to 1947. It would be four times the size of the previous decline set back in 1958.”
Markets will still be in for a rocky ride as the full impact of coronavirus shutdown bites. This could well push gold to record highs – if you’re a regular reader you’ll know that multiple institutions including a handful of banks have already adjusted their price forecasts for gold, revising them up to record highs towards the end of the year with more growth forecasted for 2021.