Following the recent market pullback, investors remain on the fence about precious metals. Judging by everything else that is going on, gold’s bull run appears far from over. In fact, there is renewed hope to see the gold price surpass $2,000 again this week.
US Treasury Yields Drop Further
In fairness, no one should be surprised about any negative news for the financial sector. The world may never return to what we all thought of as “normal” just a year ago. Things have changed in a significant manner. The full impact on the global economy remains undetermined, but the outlook remains incredibly bleak.
If the US Treasury Yields are any indicator, the rest of 2020 will be very brutal. Yields rates were reduced once again, especially the 10-year ones. Said treasuries were already under tremendous market pressure, and can still go in the red if this trend keeps up. Money stored in a bank or entrusted to a government will not yield a profit, it is that simple.
More importantly, experts are convinced the rates will continue to decrease over the coming months. Not entirely surprising, as this trend is visible all over the world. As a result, bank interest rates will also be affected, and not in a positive way. Every bit of weakness in this segment will push the prices of gold and silver higher.
US Dollar Worsens
Similar to the past few weeks, things remain worrisome where the US Dollar is concerned. The greenback seemingly can’t catch a break these days, and the situation continues to worsen over time. This causes an even bigger strain on the American economy, and one that will require more money printing.
It will remain up to the Federal Reserve to come up with a plan. President Trump has ordered a new stimulus package for US households, even though there isn’t enough money in circulation to make this happen. Printing additional Dollars is the only way forward, which will effectively cripple the economy further. It is good news for gold enthusiasts, however.
Gold Begins to Rise
Looking at the gold price chart, there is a small uptrend to take note of. It may be temporary relief, albeit the market circumstances warrant a further appreciation in value. Setting another all-time high will be very difficult, but surpassing $2,000 per ounce again is certainly plausible.
Given all of the financial turmoil outlined above, it is only normal to see more people flock to precious metals. Berkshire Hathaway gave the market a very nice boost by announcing its 20.9 million share investment in a major gold mining company. Investors and speculators were quick to respond to this unexpected news.