Gold prices continue to remain elevated, despite the near-term volatility and dips, markets are buying into those.
Why should Gold (XAU/USD) continue to push higher?
There are three key fundamental factors which will support the precious metal to the upside in our view.
Central bank stimulus
As noted in our previous blog, the FOMC made it clear they will continue to conduct stimulative measures throughout this year. Gold loves stimulus, it has historically proven to support prices. The central bank will not be changing this tone anytime soon, given the foreseen worsening market conditions.
Gold performs well in times of crisis, with the Covid-19 impacts still very much at their early stages. Recently, having seen the two largest economies in the world, reporting large contractions in their GDP.
U.S. President Trump heightened geopolitical pressure by threatening new tariffs against China over the coronavirus crisis. Long before the coronavirus came into view, the huge geopolitical and macroeconomic factor supporting gold was the trade war between the U.S. and China. If those tensions again escalate, the markets could revert back to that being the big driver, especially if China starts to send warnings back to the U.S
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