According to the WGC representative, despite the high cost of gold, the demand for the yellow precious metal will remain high until the end of this 2020, as investors need protective assets amid the economic crisis caused by the spread of coronavirus. Unsecured liquidity and low interest rates will remain the main supporting factors for the gold market.
According to the expert, investors should closely monitor the situation around interest rates. If they decrease further, the demand for protective safe-haven assets will continue to grow, which means that gold will remain the focus of investors' attention.
“Gold does not provide interest, so investors have been reluctant to invest in precious metals in the past. Now, real interest rates in many Western countries have turned negative. In these conditions, the attractiveness of gold as a means of preserving savings has grown, "- this opinion was voiced by the WGC representative.
According to a survey by the WGC, in the second quarter of 2020, capital inflows into shares of "gold" ETF funds reached a record high, while physical demand, on the contrary, showed a decline of -11%.
According to the WGC forecast, demand for physical gold will recover in developing countries amid devaluation of their currencies. Residents of these countries will want to keep their savings from further depreciation. In the long term, the yellow precious metal will continue to maintain its function as a means of preserving capital, as the weakening of fiat currencies has already become a reality for investors in some countries of the world.