The global pandemic will benefit gold in both the medium and long term with sustained price gains, according to the latest CPM Gold Yearbook. Debts, deficits and accommodative monetary policies will abound around the world when the pandemic wanes, creating a trio of factors which are supportive for the precious metal, says the Yearbook.
It adds, “While the pandemic will eventually pass, it has left the world changed and has in fact compounded and worsened some of the factors that are supportive of gold prices. This scenario positions gold well for further gains in the medium to long term. As more fiscal stimulus is poured into the system, monetary authorities will have to stretch themselves further to offset any negative fallout from such fiscal stimulus on bond yields, which should be supportive of gold prices… A combination of top-heavy equity markets and low yields on debt make gold an attractive portfolio diversifier.”