Gold price begins an uptrend

  •   07/12/2020 - 13h23
  •   DEHOUI Lionel

Over the past month, gold has performed very poorly in the markets. The various advances announced on Covid-19 vaccines have attracted investors to riskier assets. Gold was thus abandoned. The wind of hope that blew across the markets in November caused it to lose 5.32%.

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Gold price begins an uptrend

A long-term bull market cycle in sight

For the month of November, gold fell 5.32% to $1,778. Investor optimism about vaccines and other major economic news took a toll on all metals. But gold doesn't seem to suffer because it continues to track real interest rates in reverse, as it has done so well for decades.

On the other hand, real returns could create a more or less significant trough. This would then result in a small correction, but the bull market cycle will continue in the long run.

On the other hand, continued support from central banks should help sustain the trend. Indeed, we are seeing an expansion of the asset purchase program, which is a good sign for the coming weeks. In addition, monetary policies will continue to support the economy in 2021. They will certainly continue to keep the currency board spinning until the economy is stable again.

 

Gold prices are benefiting from the falling dollar

Since the fall of the dollar, gold prices have continued to rise. The greenback has plummeted in recent weeks to its lowest level since April 2018. Worse still, the nail is likely to be driven even deeper with the election of Joe Biden as President of the United States of America. In fact, the Democrat is considering several stimulus packages to support the U.S. economy.

The other news unfavourable to the dollar is the Fed's balance sheet. It has reached $7.2 trillion and could continue to climb. The dollar is thus set to be weakened again in the coming months.