By David Brough
The price outlook for gold appears bullish despite the pullback from a record peak, with the yellow metal set to be supported by ultra-low interest rates and the hefty economic impact of coronavirus.
Gold was up 0.4 percent to $1,930.30 per ounce on August 13, having retreated from an all-time high of $2,072.50 per ounce on August 7.
Several analysts said they saw room for further upside, but the all-time high, which came sooner than many of them had foreseen, was a trigger for profit taking.
Interest rates around the world seem set to remain extremely low for a prolonged period after the coronavirus pandemic shrank economies, and the U.S. dollar outlook appears weak, auguring for further support for dollar-denominated gold prices. When the dollar is soft, gold is cheaper to acquire in other currencies.
The UK economy contracted by 20.4 percent in the second quarter, economic data showed this week, even more than the sizeable shrinkages of the EU and U.S. economies, hammered by coronavirus.
Gold prices tend to benefit when interest rates are low, as bullion bears no yield. A climate of very low interest rates makes alternative, yield-bearing assets less appealing to investors.
Disclaimer: Any opinions expressed in this article are solely those of the author and should not be seen as investment advice.