Rising prospects for a vaccine against Covid-19 threaten to wipe out the gold bull market, after an epic two-year rally that pushed the precious metal to a record high this summer. Gold prices have already fallen about 10% since peaked at $ 2,000 per troy ounce in August, as confidence in asset markets gradually restored. This could be the beginning of an ongoing slide in the metal, following the announcement of two successful Covid-19 vaccine trials in November. Some “bulls” have not left the “race”, citing a possible rise in inflation that usually gives impetus to the precious metal. But the recovery of the world economy is limiting the attractiveness of gold, which is often used as a “safe haven” in turbulent times. And as investors also turn to government bonds for higher-risk securities, pushing higher yields, the relative attractiveness of non-income gold will decline. Macquarie analysts say the “circular bull market” for gold already has come to an end: compare today with 2013, when the ten-year rally collapsed as “the crisis of that period subsided and expectations for further easing of monetary policy were minimized”. The bank estimates that gold prices will fall to $ 1,550 per troy ounce next year – a drop of about 17% from current levels. Marcus Garvey, Macquarie’s head of metals and commodities strategy, told the Financial Times that this winter we will see a tug-of-war between the short-term challenge of Covid-19 and the longer-term prospects. “We are reasonably constructive in terms of global growth prospects for next year, so we think gold has reached its peak,” he added. The recent sell-off was fueled by gold ETFs, which was a key factor in its launch. price of the metal in the first half of the year. After peaking in mid-October, the holdings of natural gold in these ETFs fell by 1.9 million ounces to 109 million, according to Bloomberg data. Holdings of the largest such ETF, the SPDR Gold Shares, hit a record low since July this week. Susan Bates, an analyst at Morgan Stanley, says the bank sees “bear factors” in gold, such as the recovering global economy. with the help of the future launch of a vaccine against Covid-19, and the rise in bond yields. Some investors are moving to other precious metals that are more closely linked to industrial demand and are therefore likely to benefit from the post-pandemic recovery. As gold slips, silver, used in solar panels, is heading for a second consecutive month of rising. Prices for platinum, a metal used in catalysts, have risen to their highest level since mid-September this week. “Vaccinations will reduce the risk and therefore gold is less desirable as a hedge,” according to Trevor. Raymond, director of research at the World Investment Council in Platinum. The market may not be able to rely on central banks to fill the gap. In August, these institutions became net sellers of gold for the first time in a year and a half, according to the World Gold Council. Instead, to offset the drop in investment demand, India and China, the largest countries, may need to “intervene”. consumers of the world. Buyers in both countries were generally absent from this year’s gold rally, with global jewelry demand falling 29% in the third quarter, according to the World Gold Council. But the average premium for gold prices in India and China against international prices has recovered to near pre-pandemic levels, according to Goldman Sachs. Rhona O’Connell, an analyst at StoneX, said demand from both countries could increase as sales from ETFs accelerate. The same pattern occurred when gold prices fell seven years ago. “As the perception of risk changes, private consumers will return to the gold market while money managers are likely to leave,” he said. Gold, a common hedge in inflation, could also recover if rising prices “accelerate”. Central banks delay interest rate hikes: a drop in inflation-adjusted interest rates – or “real” interest rates – has been a key driver for this year’s rally. Goldman Sachs warns inflation risk is “higher than any other since the 1970s “because of” green spending “plans pledged by China, Europe and the US under President-elect Joe Biden. The bank, which estimates that the Fed will keep interest rates steady until 2025, predicts that gold will reach $ 2,300 an ounce in the coming months. Citi, meanwhile, predicts that gold prices will set new highs in 2021, as central bank markets will keep other asset yields under pressure. “Gold markets are likely to pull higher as re-warming concerns grow. inflation as well as investors looking to buy the currency of last resort, “said Jeff Currie, head of commodity research at Goldman Sachs. But others believe any acceleration in price increases will be overshadowed by the wider impact. economic recovery. Mr Garvey of Macquarie said it was “too simplistic” to say that gold traded in line with inflation. “It trades according to the interaction between inflation and interest rates,” he added. “We are not saying that you will not have an increase in inflation expectations – but we think that it will have a bigger increase in nominal yields.” Follow it on Google News and be the first to know all the news. See all the latest news from Greece and the world, at
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