Listen to the latest market mood for the XAUUSD pair.

There are some strong reasons for gold to rally for the medium term. Gold has extended its rally today as a weaker dollar helps push the XAUUSD higher. Copper prices also extended higher while Copper gained too on positive risk tone and strength in Chinese commodity prices which saw Dallan Iron Ore prices jump 4% at the open.

The fundamental outlook for gold remains strong with a number of factors boosting gold demand:

  1. Record levels of Exchange Traded fund purchases as investors buy into gold
  2. Large levels Quantitative Easing and fiscal policy stimulus is causing money to be devalued, so commodities become more attractive.
  3. As lockdown measures are lifted from COVID19 the depressed gold purchases from the jewellery sector should lift for Q2.
  4. Co-ordinated central bank interest rate cuts means that many countries are heading for negative real interest rates. This means that cash in the bank now loses money when inflation is taken into account.
  5. As the world heads into a recession remember that in the last three recessions, spot gold increased in value in every single one.

Therefore, expect XAUUSD buyers on pullbacks and at the market.

Risks to this outlook: Watch out for positive news about Coronavirus treatment or cure to reduce the fundamental picture for gold.