Gold Still Bullish Even as Market Sentiment Receives a Boost
Gold prices continue to trade strong, boosted by a weakness in the US dollar even as the risk sentiment in markets improves over hopes of economic recovery as countries ease lockdown restrictions and get back to work. At the time of writing, GOLD is trading at a little above $1,741.
The long term outlook for gold remains bullish amid reigning worries about the economic impact of the coronavirus pandemic, with most analysts expecting the global economy to slip into a deep recession in the coming year. Recovery, meanwhile, is expected to take much longer than previously forecast as the pandemic wreaks havoc on businesses, consumer consumption, raises unemployment levels and increases the risk of bankruptcies among companies.
Recent economic data releases from around the world further emphasize the weakness in the global economy, with trade, industries and employment under pressure as a result of the lockdowns being enforced by governments in a bid to contain the spread of the virus. Even as some countries look to reopen their economies, there are fears about a second wave of infections like in China and South Korea that keep the sentiment under check and support the safe haven appeal of gold in markets for now.
The yellow metal prices have also benefited from a recent weakness in the US dollar. The greenback has been edging lower against other currencies over the improvement in the market sentiment which is sending traders towards riskier currencies, even as US-China tensions escalate and exert downward pressure on the dollar.
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