It appears that risk aversion has finally begun to decline amid the coronavirus pandemic, as gold prices have been sliding by record levels over the last several days. Bullion prices recently surpassed the record-breaking $2,000 per ounce, but just as quickly as they went up, they have also come crashing down.
US President Donald Trump has recently announced that he may be willing to propose a capital gains tax cut, which caused some of the demand for gold as a safe haven to alleviate. Moreover, the downturn in bond yields has begun to show an upward climb, finally creating profits for embattled investors. In the meantime, ETF investors were also able to sigh a breath of relief, as outflows, which have been stagnant since June, are seeing an increase in redeemed shares.
According to Commerzbank AG commodity analyst Carsten Fritsch, the sudden and rapid increase in gold prices at the beginning of the economic collapse in the US will most likely be followed by much the same rapid and abrupt decline. He attests that the increase in profits from bond yields will start a cascade of further profits, which will in turn cause gold prices to further decline.
Russian President Vladimir Putin’s recent announcement regarding the invention of the world’s first supposedly effective vaccine against COVID-19 also adds to the positive market outlook. So far, there are over 20 million coronavirus cases worldwide, which have have alarmingly doubled within a span of six weeks. The US, which has the highest number of infections compared to all other countries, accounts for over 25% of the world’s coronavirus tally.
Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.