- Central bank policy is a strong driver behind higher gold prices.
Official rates … In a large number of countries … will unlikely go up in our forecast horizon and quantitative easing
- A number of countries … Negative rates.
Gold is not paying any interest rates. So negative rates are another major support to gold prices, especially versus the euro.
- The USA may not have negative official rates or government bond yields, but nominal rates corrected for inflation expectations (real rates) are in negative territory.
- Governments … A large-scale fiscal stimulus to support the economy. as a result, fiscal deficits in a large number of countries have risen substantially, even to double-digit numbers. This development has made some investors nervous, especially in combination with the substantial amount of monetary policy stimulus.
- The technical outlook is positive
Psychological resistance of $1,800 per ounce has been surpassed.
it seems that investors will only be satisfied if the former peak in gold prices at $1,931 per ounce is reached and taken out.
Above that, the important psychological level of $2,000 per ounce is within reach.
Year-end forecast is $1,900 vs. the previous $1,700 while for end of 2021 is $2,000 as against $1800 prior.