Is this the right time to buy gold? In August, gold price suffered one of the worst sell-downs in recent years when it fell from USD2055 per troy ounce on 7 August 2020 to USD1885 on 12 August 2020. Subsequently, gold price recovered to the USD1940 bandwidth in the following two weeks. What had caused the pull-back in gold price in early August?
Year-to-date, gold price has surged by a whopping 28%. So the current correction in gold price may represent a good window of opportunity for wealth builders to buy bullion or bullion savings programs before gold price soars again. To put things into perspective, much of the increase in gold price in 2020 is attributed to the monetary stimulus measures introduced by US government in March 2020. The recent plunge in gold price in August is also largely due to the US monetary stimulus, or the lack of it in August 2020.
Against the backdrop of economy slow-down caused by COVID-19 pandemic, gold price has been in buoyant form in 2020 because the precious metal is viewed as a safe haven. So the recent correction in gold price must have confounded many wealth builders. Is this the burst of a bubble or just a healthy correction for gold price?
Gold price in golden form
In my view, there is still plenty of room for gold price to continue rising. Many countries had encountered second wave of COVID-19 infections after reopening their economies. So it would likely take at least another year or so before global economy returns to pre COVID-19 levels. Even so, this is based on the premise that a vaccine is developed by end of this year.
Due to the devastating economy harm caused by COVID-19 pandemic, the US Federal …Read more