Is it a Good Time to Turn to Gold Again?

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Is it a Good Time to Turn to Gold Again?
Credit: © Reuters.

By Aditya Raghunath

Investing.com -- The period from November 2-11 was a good eight days for world markets. Joe Biden won the U.S. Presidential elections and Pfizer’s clinical drug trials were successful. Companies reported better than expected results for the quarter ended September 30, 2020. Markets across North America, Europe, and Asia celebrated the good news with a strong rally.

However, as the enthusiasm from these events died out, people faced hard facts. Donald Trump is not going to make it easy for Joe Biden to govern. The Pfizer (NYSE: PFE ) drug will take months if not years to roll out, and the virus is back in its second wave threatening to derail the momentum businesses have picked up.

The U.S. recorded eight consecutive days of over 100,000 cases daily and large parts of Europe are under lockdown again. France said it has more people who are hospitalized now from COVID than in the first wave.

When such uncertainty exists in the market, investors turn to gold . Gold is currently trading at $1,875.5, up 0.11%. The commodity has fallen almost 8% from its August peak of $2,038. However, if the number of cases keeps going up, gold is a solid defensive investment.

It is inevitable that there will be another round of stimulus packages which may weaken the U.S. dollar and keep interest rates near record lows, both of which are key drivers for gold prices. Even Warren Buffett is bullish about the yellow metal and purchased Canadian mining company Barrick Gold in the second quarter of 2020.

 

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100
  • Anurag Sharma @Anurag Sharma
    Fed is hero
    Like 0
  • Ganesh Acharya @Ganesh Acharya
    very well described
    Like 0
  • Ganesh Acharya @Ganesh Acharya
    very well described
    Like 0
  • viky jain @viky jain
    i think gold once again come 58000 n also 38000
    Like 0
  • Vijay Kotwal @Vijay Kotwal
    Dear Mr. Raghunath, Absolutely right. By Dec. 20 equities all over the world will take dip by 6-10 %
    Like 0

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