The first quarter brought emotions for the financial markets, and it looks like we could be witnessing some major changes sooner or later. One of the reasons being, of course, the Covid-19 exit day that seems that to occur anytime soon. With the bitcoin charts flatlining, the stocks of tech tumbling, as well as the proclaimed end of Bonds (according to Warren Buffet), gold could regain its position as a safe haven once again.
Gold prices have actually continually depreciated since August, as back then (on 6th August to be precise) the precious metal peaked at $2,070.05 per ounce. In the following months, it slipped back and rather stayed under $1,800, with President Biden’s plans to flood the economy with $1.9 trillion worth of Covid-19 relief.
Let’s have a quick look at the recent gold performance to see what has really been happening lately. Maybe this will help us answer the questions about its future.
The recent gold performance
The plunge we wrote about before came right after a little rebound. Which could be easily unnoticed with everything that was happening on the market (it was the moment of bitcoin’s meteoric rise among others). In New Zealand, the gold terms rallied by +0.14%, and in the United States by +0.56%. Because of that, it renounced a bit, breaking the $1,800 barrier. But it did not take long for the trend to reverse.
In the United Kingdom, the depreciation was really pronounced, as the gold fell -0.32%. And what is rather interesting, is the fact that the gold struggles continued even when the USD fell back (meaning there could be a growing appetite to use gold as a safe haven). But it could be attributed to the fact that the economic outlook looks better and better, as we’ve worked out more sufficient Covid-19 rollout programs. The growth forecasts have been actually upgraded – currently, the global economy is supposed (according to the projections) to grow by 5.5% in 2021.
What about the future of gold?
What conclusions could we have after observing gold’s recent performance? There is, without doubt, a kind of sentiment creeping into the market once again. And it is pretty convenient for some that the gold seems to be stuck between $1,800 and $1,850 per ounce.
The predictions say that even the rising inflation will actually not be able to support the gold prices. Although the predicted inflation rate over the next 2 years is expected to be 2%. This (relatively low, when you take the magnitude of Covid-19 impact on the economy into the consideration) is a part of an economic outlook that looks increasingly better.
Despite that, we are still witnessing the good times for gold. As the last time it was in the same place as today, was in 2011. Back then there were 175k tonnes of the ore’s supply, and the Money Supply equaled $9.5 trillion. Over the course of the last decade, the money supply has actually doubled. But the gold supply got only 14% higher.
If you want to follow the gold’s story, and find out about the predictions for the future of it, feel invited to use the following link and read the interesting piece published by Disruption Banking: https://disruptionbanking.com/2021/03/08/is-gold-the-safe-haven-it-once-was/. The author has, besides the quick recap of recent events. And their own analysis of gold performance presented the specialist’s responses.
Jason Cozens is the Founder and CEO of the company Glint. Claims that even with the recent gold prices dip, the ore’s reputation wasn’t disrupted. He reminds everyone that short-term fluctuations of the market happen all the time, and when compared to the sudden. Almost overnight, cryptocurrencies drop (by even double digits) that we could experience recently. Gold still feels like a very safe option.
This could in fact bring us to the conclusion. That gold is still one of the safest (if not the safest) currencies available. But of course, this does not mean that it is completely risk-free. It’s important to point out that every form of investment could bring some unexpected losses or gains. We have witnessed a steady increase, but we could as well see a sudden drop.