Gold prices have started the week off in robust fashion, gaining £36,58 ($50) in just 48-hours on Monday and Tuesday. The bumper price action comes as COVID-19 cases continue to hit worrying highs, even as the first ever vaccines were administered.
Date from John Hopkins University, which has been tracking the outbreak worldwide since the start of the pandemic reports that an average of 200,000 American citizens are testing positive for the virus each day, with as yet no White House mandate for lock downs or mask wearing. Amidst the soaring case load, there are also fears the US government is heading for a total shut down as soon as Friday as law makers continue to debate additional stimulus measures; both of these circumstances heavily favour gold, making now an optimal time to buy.
Carsten Fritsch, the analyst from German bank Comerzbank said even bigger price gains are on the horizon, “Gold has reversed most of its price slide in November. In view of persistently high numbers of new corona cases, which are resulting in tougher lockdowns (e.g. California, Germany), there is growing pressure on politicians to roll out further stimulus measures. New debt-financed economic aid would drive up inflation expectations. Since interest rate expectations are fixed because central banks have promised to continue their ultra-expansionary monetary policy, real interest rates will slide ever deeper into negative territory. This, in turn, is a key argument in favour of a rising gold price.”