Gold prices are still having a hard time trying to make a comeback after the price free-fall that prevailed for the past five days or so, especially as the coronavirus continues to take a toll on the markets.
Gold has not performed so well over the past week on the heels of various economic measures aimed at stimulating global economies. This may account for the dollar’s strength and also the fact that investors have been keen on jumping on opportunities presented by the fiat market as governments react with economic support measures.
The gold vs U.S dollar exchange rate stood at $1,589 at the time of this press and has for the past two days been characterized by back and forth movement as the price attempts to recover. However, the pullbacks have maintained the price below $1,600.
Gold prices hit a high of $1.644 on Thursday last week before embarking on a week-long bear trend which saw the price hit a low of $1.568 on Tuesday this week. The price has been attempting to recover for the past two days.
UOB says gold prices will soon jump to $1,800
The United Overseas Bank recently released a statement in which it revealed that it expects gold prices to experience a massive surge that will catapult it to around $1,800. UOB believes that the expected price surge will be fueled by fiscal policy changes and monetary policy stimulus measures implemented by governments across the world. So far governments have been implementing economic measures to cope with the massive economic fallout caused by COVID-19.
UOB believes that the current economic situation points towards a global recession. Such an outlook is no longer farfetched especially considering just how bad the global economy has suffered over the past few months due to the global outbreak of the coronavirus. At the current pace, it looks like things might not get better soon.
If the global economy continues to suffer, that will exasperate the markets even more and push them closer to the edge. A global economic crash would thus be inevitable and such a situation would lead to a higher demand for gold.