The start of the week saw gold prices reclaim the $1,700 level after hitting support levels late last week. The precious metal was also aided by crashing crude oil prices and continuing concerns regarding coronavirus-induced damage to the economy.
Gold hit its lowest point since April 9 at the end of last week due to reports of new treatments for COVID-19. The price was back to approaching $1,700 by midday Monday though, hitting $1,692, with futures also climbing to $1,709.
That could just be the beginning of a continued upswing for precious metal investors however, with TD Securities issuing a target of $1,900 an ounce in a mere three months from now. The reasons for the jump are primarily the anticipation of continued safe-haven demand amid market uncertainty and the continued stimulus efforts of central banks.
There is also the belief among analysts that the market is currently undervaluing gold, especially when taking into account the expected long-term inflation and the overall scale of global quantitative easing.
Bart Melek, TD Securities’ Head of Commodity Strategies, explained how “The Fed’s latest QE program is now the largest on record. Of course, there is a well-known relationship between QE and lower real rates, such that it ultimately suppresses real rates by lifting inflation expectations at a faster pace than nominal rates … The Fed and other central banks are likely to keep their uber-easy policies in place for far longer than anticipated, following a decade of below-target inflation and a newfound interest in asymmetric inflation targeting,”