How will gold yield during winter?
Some of you have probably already seen the snow, but real winter is yet to come. Unfortunately, instead of playing snowman this year, we will have to fight with the coronavirus.
Vaccines will help us; the first doses of Pfizer’s vaccine have already started this week. However, its widespread distribution will begin next year, so we continue to deal with the pandemic. The daily number of infections in the US remains above 200,000.
Economic recovery in the US in the summer of autumn this year is part of the past. The labour market report for November was weak and disappointing. Without going any further, the number of hotel reservations and air travel, in addition to restaurant occupancy, has been falling in recent weeks.
However, there are also more factors behind the most recent slowdown in the economy. The first is that the pace of recovery could not be sustained. In spring, the economy entered a deep crisis that coincided with the time when strict quarantines were introduced in many countries. When that first wave passed, the economy recovered quickly, but that rate has dropped as expected. Besides, fiscal aid was introduced to make GDP rise, but Congress has since failed to agree to develop another stimulus package.
But what will be the next movement in gold prices?
What does all this mean for gold? According to analysts, the economy will grow again strongly if vaccines are widely distributed among the entire population. However, before this measure affects the economy, we will have a tough winter ahead. This means that the next few weeks could be beneficial for gold. In recent years the precious metal has seen a rise in January, sometimes even in the second half of December.
Certainly, vaccines can somehow change the dynamics of the world in the coming year. The effect they are having is an increase in the demand for risky assets, a rise in the stock markets. It damages the demand for safe havens such as gold. Therefore, analysts see a downward risk.
On the other hand, vaccines could protect us from the virus, but they will not solve all our economic problems.
The post-winter and pandemic scenario may also benefit gold. Many factors should boost gold prices in the coming year: a supposed new stimulus package in the United States, low-interest rates, concerns about the US dollar and debt sustainability. Also, there is a fear that inflation will skyrocket after the economic recovery of 2021.
