A few weeks ago, gold proved to be a safe-haven asset once again with its rise. However, it has experienced a decline with its response to the latest COVID-19 news. So, what could happen in the gold price this week? cryptocoin.com We convey the comments of the experts…
How could the coronavirus variant affect the gold market?
Fear of a new COVID-19 variant is triggering the latest panic selling in risky assets, experts say. While not much is known about the new variant outside of South Africa, there are fears that global economic activity will be curtailed as governments implement new quarantine measures to stop the spread of this new version of COIVD-19. Countries around the world, including Canada, have imposed travel bans on South Africa and six neighboring countries.
Economists are not only concerned about a slowing global economy. At the same time, any new quarantine measures will add more problems to the existing supply disruptions. So, according to economists, there is an increased risk of stagflation. While gold appears to be well supported in the new environment with unknown COIVD-19 risks, the precious metal still has a lot of damage to repair after Monday and Tuesday’s big sell-off, according to Kitco analyst Neils Christensen.
“No matter how much the Fed cuts its asset purchases, they will undoubtedly fall behind the inflation curve, so real interest rates will remain low – it will be a positive environment for gold,” Christensen noted. For now, we will continue to wait and see how the new COVID-19 threat will unfold. However, it is emphasized that if there is a possibility that central banks around the world are at risk, things may not go well.
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