3 Reasons Why Soaring Gold Prices Could Crash in 2020

  • Gold is on a massive rally with some analysts giving price targets as high as $3,000.
  • The metal is benefiting from low-interest rates and safe-haven demand amid the coronavirus pandemic.
  • But gold’s rally might not last. The asset faces near term risks that could send its price crashing down.

If anyone is benefiting from the coronavirus pandemic, it’s gold investors. Gold prices have soared over the last several months, with the metal up 13.74% year-to-date compared with a 12% decline in the S&P 500. Some analysts believe the price could hit $3,000 in as little as 18 months.

Gold has outperformed the wider market in the first quarter. Data by ycharts.

Gold prices are rising because investors see the metal as a safe haven against global uncertainty and a hedge against inflation — especially with the Federal Reserve undertaking unprecedented levels of stimulus to combat the coronavirus pandemic.

But several factors could send prices crashing back down to earth. Here is a list of three things that could crash gold in 2020:

1. A Coronavirus Vaccine

By betting on gold, investors are essentially shorting the human race. That’s because the metal benefits from the ongoing human and economic turmoil unleashed by the coronavirus pandemic. According to Edward Moya, a senior analyst at brokerage firm OANDA, progress in developing a coronavirus vaccine will probably derail gold’s rally.

And thankfully, a vaccine looks closer than ever.

According to the BBC, 80 groups around the world are currently researching a coronavirus vaccine with several already in clinical trials. Vaccine development usually takes years, but researchers hope to fast-track the process to months by skipping animal tests and other steps.

Most experts believe a vaccine will be available by mid-2021 which could mark the expiration date of the precious metal’s current rally.

But a vaccine isn’t the only thing threatening gold prices. Several companies, including Gilead, are working on…

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