Gold bugs to bite?
Interest rates around the world are projected to remain weak for the next few years. The Fed is on hold until 2023. The BoE meets today and rates are rock bottom and expected to remain so. yes, they kicked back a little on negative rates, but that was expected. There are awaiting a report from commercial banks on how their profitability would be impacted by rates going negative.The RBA cut rates this week to 0.10% from 0.25% and some central banks actually have negative interest rates.
When you factor in inflation this means that real interest rates are negative. Put simply, cash loses value over time. All of this means investors are incentivised to put their cash to work. With quantitative easing rising across the world this further weakens currencies, so a commodity like gold can gain.
On top of all this the current COVID-19 recessionary environment lays a solid foundation for further gold gains. In the last three recessions gold has gained in value
Where to enter
One obvious place to enter is on the break of this, and pullbacks towards, this daily trend line. Stay above and bulls are in control. Get below and bears have the hand again. Targets? 1950,2000, and then 2050
This is a great environment for gold to prosper in. Fundamentally and technically it is hard to see a better place to buy (aside from $1820, but it doesn't look like it will drop that far now)
