After Black Monday, the markets were able to recover slightly. The cost of gold and silver is under pressure. The yellow precious metal was trading yesterday at around 1,658 dollars per ounce, which corresponds to 1,457 euros. One ounce of silver was trading at $ 16.87, corresponding to € 14.83.
The fact that precious metals stopped the price rally against the backdrop of coronavirus and falling oil prices, analysts attribute the fact that large institutional investors began to take profits to cover losses from stocks, selling part of their positions in gold. Targeted intervention in the gold market cannot be ruled out in order to slow down the growth of precious metals. The fact is that the demand for physical gold and silver continues to remain at a high level throughout the world. But what needs to happen for the price rally in the gold market to continue?
The situation in the financial markets continues to be tense. The crisis of mistrust is growing on the interbank market. At any time, banks may stop lending to each other. In this case, there will be a liquidity crisis. Then they will begin to get rid of “paper” gold in order to take profits and receive cash. The gold market in this case will be under serious pressure.
Something similar was already happening in 2008. Then the price of gold went down for three months before growth began again. The Fed had to step in and start several stages of “quantitative stimulation” (QE). This time the situation may be repeated. It cannot be ruled out that the US Federal Reserve will directly buy shares of companies and shares in them.