Gold Keeps Shining, Growing Concerns for Financial Asset Bubble

Economic macros that include The US CPI index used to gauge inflation rise, was good for gold, and the recent weakening of the greenback amid calls by a U.S Fed Reserve official on more stimulus triggered the gold bulls.

“Sideways price move for the last few days has resulted in day traders booking profit on [a] rise,” said Chintan Karnani, chief market analyst at Insignia Consultants.

The precious metal’s market had relatively been bullish as the rampaging virus, as the pandemic halted economic activities in many leading economies.

However the recent news on a positive vaccine trial by a leading U.S drug maker took some of the shine off the precious metal.

Still, as cheap money abound globally, triggered by the global central banks enormous stimulus packages it’s most likely that the world will face a wave of asset bubble on some financial assets coupled with price inflation on leading fiat currencies.

Even if the global economy returns to pre- COVID-19 pandemic levels, and all economic systems normalize, with the help of a COVID-19 vaccine, it would be very difficult for economic stake holders to deflate the massive global stimulus finding its way into every liquid financial assets.

In addition the outlook for gold on the mid and long term seems bullish for gold ,on top of the big sized stimulus already injected into the global economy coupled with U.S Federal Reserve Bank leaving interest rate at zero for the short and mid-term, it becomes very difficult not to view a tsunami of asset price inflation on many global financial assets.

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