One of the most important trends that we have been following during the COVID pandemic is the amount of gold that is being purchased by central banks all over the globe.
Although the amount of gold that is being purchased, is significantly below the record levels of buying that we saw in 2018 and 2019, we expect to see an uptick in purchasing activity post-2020.
Going forward, we expect to see countries besides for the US act as the biggest purchaser of bullion and find this to be significant. The markets that we expect to have the most significant impact on the price of gold in the near and long-term are Russia and China.
We believe that Russia could return to the market next spring and are of the opinion that China’s central bank may resume adding to reserves after the US elections. If these two governments start to purchase more gold, we expect to see price spike higher and this is a trend that we will continue to follow.
Currently, several of the world’s largest economies are reporting rising numbers of COVID cases. Although the death rate has decreased since the start of the pandemic, the virus is having a negative impact on the global economy. To combat the virus, governments continue to print trillions of dollars to support the economy, but this is a trend that cannot continue forever.
The continued printing of money should serve as a tailwind for precious metal prices. In the near-term, the market expects the US government to pass a more than $2 trillion stimulus. If the stimulus legislation is passed, we expect to see precious metal price shoot higher and will monitor how this plays out in the near-term.
The only way to stop the pandemic is through the development of a treatment or vaccine. Governments continue to issue massive grants to large pharmaceutical companies that are working on the development of a vaccine and this is a trend that is expected to continue until a solution is found.
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