Gold: The right time to buy?

Now the US election risk is fading and volatility is returning to normal levels this may be the perfect time to buy gold.

Global low interest rates

Interest rates around the world are projected to remain weak for the next few years across multiple countries. The Federal Reserve have said that they will remain on hold until 2023. The Bank of England met this week on Thursday and rates are rock bottom and expected to remain so for the foreseeable future. The Reserve Bank of Australia cut rates this week to 0.10% from 0.25% and expect to remain at these low levels for the next three years. Some central banks actually have negative interest rates like the Swiss National Bank and the Bank of Japan.

The inflation factor boosts gold’s appeal

Inflation is a help to gold’s appeal. When you factor in inflation real interest rates are negative across many countries. Put simply this means that cash loses value over time. Therefore, investors are incentivised to put their cash to work. Also, with quantitative easing rising across the world this further weakens currencies, so a commodity like gold can gain even further.

On top of all this the current COVID-19 recessionary environment lays a solid foundation for further gold gains. In the last three recessions gold has gained in value.

Where to enter

One obvious place for traders to enter was on the break of this, and pullbacks towards, daily trend line. Stay above and bulls are in control. Get below and bears are in control again. The targets are 1950, 2000, and then 2050.