This morning, the British government followed in US footsteps by announcing an unexpected emergency interest rate cut and series of measures to help buoy the economy as coronavirus continues to bite. This unusual move further raises concerns that a global recession could be on its way as economies around the world grapple with falling production, labour shortages and lack of demand due to the pandemic.
In the US, Wall Street has only just avoided dipping into a bear market and we have consistently seen huge stock market losses, each marking new lows and echoing similar declines witnessed before the previous recession.
Over the weekend Italy’s government confirmed another surge in cases, leading to tough measures that have placed the whole country in lockdown in an effort to contain the disease. This news triggered gold to a high of more than $1700 while oil fell to deep lows. Also, on Sunday, the 10-year US bond dipped below 50 base points – which is also a sign of looming recession.
For stock market investors, the landscape is challenging and the immediate term outlook worrying – but with gold, the safe-haven demand is only set to increase, the prospect of a new bull run looks increasingly likely. This is compounded by the fact that scientists suggest the coronavirus may not peak till next year, with a vaccine at least 12 months away too.
With the economic uncertainty set to continue, buy gold now to capitalise.
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