In August 2020, the gold market witnessed its biggest drop in the last seven years. With the number of Coronavirus cases reaching an all-time high in the USA, major businesses were forced to shut down and traders started panic-selling their stocks.
The Trump Administration’s delayed response to the threat further demotivated investors who were already anxious because of the reduced interest rates.
However, with Pfizer’s recent announcement of the Covid-19 vaccination’s 90% success rate, and Joe Biden’s win in the US Presidential Election 2020, the gold market across the globe has become volatile. Currently, the gold price stands at $1887.600 per ounce, offering a promising future to investors in the long term.
In the coming months, it is expected that due to Pfizer’s and BioNTech’s announcement of a potential vaccine, there will be increased investment in the gold market. It is still uncertain when the vaccine will be made available to the public as the company continues its clinical trials and awaits FDA approval.
Even after the distribution of vaccines, it is believed that the global economy will take a few years to completely recover from the recession, mainly due to ineffective trade deals and political deadlocks as in the case of Brexit. All this period of uncertainty is expected to lower the gold price further and may even reduce it to $1500 per ounce in the coming months.
Moreover, even with Biden sworn in as the next President of United States, the Senate will remain largely Republican and the loose monetary policy will not only further reduce interest rates but also continue to weaken the dollar, leading to an increased inflation rate. During these times, gold which is known to retain its purchasing power will become the preferred asset for most people.
So, even though we have witnessed major shifts in the economy due to the Covid-19 pandemic and US Presidential Elections, the uncertain times and an unstable economy mean that gold prices will remain low in the near future, offering exceptional investment opportunities to buyers.