The gold price is taking a breather today after rallying hard over the last 4 trading sessions but this pause is expected to be temporary as uncertainty surrounding the coronavirus continues which will keep investors looking towards gold as a safe haven asset.
Even a booming US dollar has failed to dent the appeal of the precious metal which is an unusual situation as when the greenback is trading high, gold usually suffers which just goes to show its popularity at the moment.
“Normally this would exert pressure on gold (A strong US dollar), but in a market environment characterized by great uncertainty about how the corona crisis will develop, and the fact that its economic impact is almost impossible to put any figure on, gold is able to hold its own against the U.S. dollar, which is likewise regarded as a safe haven,” said analysts from Commerzbank.
Another problem is expected to eventuate when the coronavirus issues are finally over and that being the lack of goods on world markets, caused by business shutdowns so when demand picks up, inflation is set to spike which will be another boom for gold as investors seek protection against rising prices.
“The severe impact of the global lockdown on economies and financial markets, the flood of money released by central banks and governments and the ballooning sovereign debt point to ongoing robust demand for gold as a safe haven and last-resort lifeline,” the bank said
 “Gold could also derive additional appeal as a protection against inflation after the lockdown is eased if the pent-up demand meets for a time with limited supply of goods and services due to production shutdowns and disrupted supply chains.
Just how high gold will go is anybody’s guess but according to one analyst $2000 is not out of the question and will be in part due to the US Central Bank’s moves to kick start the US economy by flooding the country with money.
“I do believe gold over the rest of this year will get to $2,000. I think it should be in your portfolio. The massive liquidity injected by the Federal Reserve, it’s going to support asset prices like equities, but it’s also going to support gold,” said Bill Baruch, president of Blue Line Capital