Gold Flashes Green as the Dollar Remains on the Defensive—Opportunity for Investors
Investors have taken a shine to the yellow metal and the various investment opportunities it offers as the dollar slips.
While the surge in oil prices may be to blame for defeating the dollar, the precious metal market is in full swing. The numbers on the trade deficit keep increasing as the state churns out billions on account of the treasury debt.
This is a blow to the most potent global currency: the US dollar. Investors can foresee the impending doom and are desperate to protect their wealth through other means.
The rise in US consumer prices and inflation figures are adding to the pressure on the currency. These macroeconomic imbalances are eroding the value of the dollar. Combined with geopolitical tensions between the US and China, the dollar is expected to lose more of its purchasing power.
Gold Shines as the Dollar Falls
While the economic situation has become volatile due to the falling dollar value, it’s creating inroads into the precious metal industry. The weakening of the dollar has proved positive for gathering investor support in gold.
The economic uncertainty resulting from the tumbling of the stock markets has also made the currency volatile. The US dollar peaked in February this year but has fallen since by 3%. As a result, people are drawn toward safer assets to protect their wealth and savings. This has boosted the market for gold investments.
Global Economic Slowdown and Gold Investments
Indeed, investors often book profits, and that leads to a dip in gold prices. But the biggest concern for investors right now is the global economic fallout and its impending consequences. This has kept the sales of gold bullions on track.
While the pandemic takes a toll on economies worldwide, central banks aim to minimize the financial losses. The US House of Representatives approves a coronavirus relief bill worth $484 billion. Gold has benefited from such measures because it’s viewed as a hedge against inflation and currency depreciation.
Will the End of the Endemic Affect Gold?
Even though healthcare authorities are working towards making a vaccine for COVID-19, this outbreak continues to affect populations worldwide. The only positive thing that has come out of this situation is that people still have a way to secure their money through gold investments.
Until there’s a breakthrough in medical solutions for the novel virus, gold will continue rallying for the first rank.
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