Comex's recent data suggests that April gold futures are moderately gaining position. This morning, the precious metal showed an increase of $5.55 on the US stock exchange, which is equivalent to 0.32%.
Analysts associated such slight growth in asset value to the latest coronavirus news in the world. Unfortunately, the situation is not improving. The World Health Organization has been reporting an increase in the number of cases for almost a month. In the last week alone, the growth in new coronavirus cases was 8% compared to the previous seven-day period. The number of deaths caused by COVID-19 has also increased, with 3% more deaths.
The information coming from individual countries is also not pleasing. Europe is still having a difficult time, fearing a third wave of coronavirus. At the same time, 16 departments in France, including Paris, have been put on lockdown for four weeks. Its neighboring country, Germany, also extended the quarantine until April 18.
It is also clear that the current pandemic and the adoption of stimulus measures by a number of countries to prevent the virus from spreading, significantly constrain the growth rate of the economy. In this context, investors prefer to invest their funds in reliable assets, which historically include the yellow metal.
However, French bank Societe Generale said that we should not expect gold to rapidly and confidently rise in the near future. According to a recent report, analysts predicted serious pressure on the pricing of the precious metal. It will be caused by an improvement in epidemiological situation and, consequently, the global economic situation. A competent distribution of vaccines across countries can contribute to a favorable development of events.
Experts forecasted that this year's price of gold will follow a different scenario compared to the previous one. It can be recalled that there was only a significant capital inflow in the stocks of gold exchange-traded funds during the first half of 2020. In the same year, the opposite scenario develops. There is an outflow in funds, which resulted in a decline of gold's value.
Analysts at Societe Generale are almost sure that gold's current downward dynamics will persist in the near future. Based on their forecast, the price of the specified metal will fall to $ 1,675 at the beginning of the 4th quarter. By the end of the year, the price of 1 troy ounce is expected to be $ 1,525.
Michael Armbruster, Managing Partner of Altavest, agrees with the French experts on this issue. He also believes that the situation in the market in the next few months will not be in favor of gold. The continuation of the US Federal Reserve's soft monetary policy is the main factor that will hinder gold's growth.