The graph below is very illustrative. For 3 months now the yellow metal has been in a slight downward trend. At the same time, the world economy continues to be pumped with printed money, which is supposed to flow to the gold market. However, it refuses to grow. Let’s find out why.
There is a classic situation on the market. When everyone is waiting for yellow metal to grow, the latter refuses to grow. You can remember that the same thing happened to Bitcoin during the year. All analysts were waiting for it to grow, and it was in the corridor for a long time. But when everyone was tired of waiting, Bitcoin suddenly started the rally, rising from levels of $8,500-9,000 to $16,000, and this is far from the limit.
Several factors prevent the price of gold from rising in the short term:
• It is likely that large buyers of gold are taking a break before the end of the US presidential election.
• And at their end, when they see that there is no riot that was expected, speculators reduce long positions.
• There is 1 other interesting observation noted by brokers. Players are increasingly less interested in gold ETFs. Why? More and more players are moving to the BTC, believing that next year the first cryptocurrency can show 100% growth again.
• And of course the encouraging news about the COVID-19 vaccine suggests that money is being transferred into risky assets.
What awaits us in 2021?
However, the major US investment banks continue to have a positive view of gold in 2021. For example, Goldman Sachs forecasts a price of $2,300 and Wells Fargo forecasts a price of $2,100 for 1 troy ounce.
But the most important driver of growth in the cost of gold has not yet even begun to pay back. It is that in 2020, for the first time in history, the growth in demand for investment gold will outpace the growth in demand from the jewellery industry. What can this lead to? A tangible shortage of physical gold, which buyers will feel in the first half of 2021.
What awaits us today?
00.50 Japanese GDP for Q3
03.00 Retail sales in China for October
09.40 Speech by Philip Lowe, Head of the Bank of Australia
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