Even though it has not been a good week for gold price enthusiasts, the future outlook hasn’t changed much. There are still plenty of reasons as to why the $2,000 point can be reached again. This temporary setback should not erode confidence of long-term investors whatsoever.
A Temporary Gold Price Setback
It is evident that the coronavirus vaccine excitement has already started ebbing down again. Despite very bold claims, most people acknowledge Russia probably has no working vaccine. With no scientific evidence to go by, or any real evidence other than claims by Putin, there is nothing to prove this alleged vaccine exists.
As such, the price of gold and silver has begun to recover once again. A temporary setback was somewhat to be expected after the recent strong uptrend. As the markets recover strongly, one has to wonder what the future will hold. All things considered, the market outlook has not changed all that much.
Weak Dollar Favors a Higher Metals Price
One thing that is evident: the US Dollar remains in a very weak position. Despite the recent vaccine excitement, the greenback has not noted any real improvements. As the Dollar remains weak, a strong price rebound is likely for all precious metal markets, as well as cryptocurrencies.
While many people had hoped for a new stimulus package, that seems further away than ever before. An ongoing strain in negotiations ensures that no new stimulus package will be introduced. That will, in turn, continue to trigger market weakness for stocks, bonds, and treasuries.
Gold ETFs Remain Popular
Even though the current gold price may not always show it, there is a genuine interest in this metal. So much even that more and more investors find their way to gold ETFs. Exchange-traded funds linked to this precious metal have noted a strong influx of fresh capital.
More importantly, the ETFs are stockpiling gold. Global holdings now sit at over 3,365 tons, which is a very impressive number. All gold ETFs combined hold half of the gold owned by the United States, the country with the largest gold reserves. Even hedge funds are now moving from gold futures to gold ETFs, which will further fuel demand for hoarding bullion.
Economic Future Remains Unclear
Regardless of how one looks at the economic situation, the future remains very uncertain. With COVID-10 still weighing heavily on the world economy, no real changes can be expected. It is very possible that this will continue to cause a strain for at least another year, if not longer.
What that will mean for domestic economies, is difficult to predict. A lot will come to action taken by central banks. Printing more money will be the most likely outcome, given recent strategies. More inflation is always beneficial to safe haven assets, including gold, silver, and Bitcoin. They are likely to see another price increase soon.