Bull case for gold remains despite coronavirus vaccine

  • Gold prices retreated last week on Pfizer’s vaccine news
  • Price was trading around $US1,880 on Friday – buying opportunity?
  • TD Securities and Royal Bank of Canada say macro case remains strong

Gold prices have dipped following positive news about Pfizer’s coronavirus vaccine candidate – but a number of analyst say the bull case for gold remains.

The Royal Bank of Canada and TD Securities last week both made the case for gold even as it tested a crucial support level around $US1,850 an ounce on Pfizer’s news.

“Vaccine should ultimately be a boon for gold bugs, as the Fed could keep nominal rates capped while inflation expectations could firm further as a result,” TD Securities strategists wrote on Wednesday.

RBC meanwhile said in a note to clients on Thursday that while investor flows to gold had levelled out, an effective vaccine would take time to distribute, the economy would take time to recover and political uncertainty remained a worry.

“We believe that there is still a clear appreciation for gold amid all the uncertainty that still persists,” the bank said. “Gold’s story is not yet over in our view.

“All of the reasons for gold strength over the past few months are still in place. The horse has left the barn,” Bryan Slusarchuk, CEO of mining company Fosterville South Exploration, told CNN last week. “People are looking at gold as an alternative currency.”

Gavin Wendt, the Sydney-based founding director and senior resource analyst with Minelife, agrees.

He told Stockhead that central banks have been buying gold and “there’s every indication there is going to be more government stimulus.

“That creates a fantastic environment for gold.”

He said in the near-term it could push past $US2,000 an ounce and hit $US2,200 or $US2,300 next year.

“Ten percent upside – that’s easily achieved,” he said.

In the medium-term, Wendt believes the yellow metal could reach $US2,500 or $US2,800 within the next three to five years – “with the possibility the price could surprise to the upside,” given how central banks seem to be abandoning inflation targets.

“Their current strategy seems to be inflating away debt,” he said.

Wendt said that higher-cost miners would stand to benefit the most from higher gold prices.

 | 

Related Post

EDUCATION BEFORE INVESTING

Learn How A Precious Metals IRA Can Secure Your Retirement

The precious metals market may seem intimidating, but it’s not as it seems. Our team has compiled a summary of our tips and information into a free guide so you can learn how to begin securing your future.

TALK TO AN IRA ACCOUNT MANAGER

We Will Guide You Every Step Of The Way

Schedule a Call
Learn Why Everyone Should Own Real Gold & SilverRequest Your Free Step-By-Step Investment Guide

"*" indicates required fields

Name*
I'm interested in (please select all that apply):
Hidden
This field is for validation purposes and should be left unchanged.

Inside this Free Investment Guide

  • How a Gold IRA Gives You Full Control.
  • How You Can Grow Your Retirement.
  • How to Open a Gold IRA Tax & Penalty Free.

Disclaimer

By clicking the button above, you agree to our Privacy Policy and Terms of Service and authorize Oxford Gold or someone acting on its behalf to contact you by text message, ringless voicemail, or on a recorded line at any telephone or mobile number you provide using automated telephone technology, including auto-dialers, for marketing purposes. No purchase required. Message and data rates may apply. You also agree to receive e-mail marketing from Oxford Gold, our affiliated companies, and third-party advertisers. To opt-out at any time click here or reply STOP to opt-out of text messages.