The stock markets have largely made up for the losses from the corona crash in recent weeks. There is therefore hope in the stock market that the worst of the corona crisis has been overcome, even if the pandemic has not yet been overcome. Since gold has risen in parallel with the stock markets, the precious metal does not behave like a classic safe haven, but is in demand despite the increasing risk appetite.
Gold price per ounce in dollars
The bailouts of governments and central banks, which have recently been expanded, serve as a catalyst. “The American central bank is now also active on the bond market and buys bonds from companies,” explains Carlo Alberto de Casa, chief analyst at the British broker ActivTrades. “In addition to bond ETFs, she also buys bonds from companies with an investment grade ranking, but also junk bonds to support the stricken sector with the risk of causing market distortions or bubbles,” continues de Casa.
The Fed wants to stabilize the tense situation among the numerous heavily indebted US companies. The economic stimulus programs in China, Japan and Europe also reach trillions.
Ideal environment for gold
This situation speaks for engagement in gold, especially since the measures could exacerbate the debt situation. It is therefore advisable to add moderately leveraged turbos as a deposit, for example paper with the WKN HZ8DCW (onemarkets, lever 7) or the WKN CU8ELR (Société Générale, lever 5).
The debt of most countries has increased anyway due to the massive liquidity measures by governments and central banks and can lead to higher inflation in the medium term. However, it is not yet as far as the latest consumer prices in the US have shown. They fell more sharply in April than they have since the financial crisis. As key interest rates are likely to be kept at a low level in the long term due to the prevailing economic downturn, an ideal environment for gold is emerging.
Falling interest rates favor gold investments
If the US economy continued to suffer from the Corona crisis for longer, as US Federal Reserve chief Jerome Powell said last week, interest rates could fall even further, which would be even better for gold. In the US, the specter of negative interest is now haunted by the ranks of economists. This is because the precious metal does not generate any interest income and loses its yield disadvantage compared to other forms of investment if interest rates also fall elsewhere in the world.
A higher gold demand can already be observed as the shop sales at Ophirum or others show, but the turnover on the stock exchanges at Gettex, Etoro or the ETFs also make this clear. The latter are already heading for solid growth of 75 tonnes and more in May, which means that they should grow roughly as strongly as in the previous two months. The short and medium-term prospects for the yellow precious metal remain promising due to falling interest rates and growing debt.
Daniel Saurenz operates the Feingold Research exchange portal. It offers a daily trading letter that you can test free of charge for 14 days. Register at Info@feingold-research.com or try the exchange service at this link