After a brief dip below $1,800 an ounce Thursday, the gold market has once again bounced back and is now looking to end the week near its recent nine-year highs. In a report Friday, commodity analysts at Commerzbank said that they don’t expect to see any major correction in gold in the near-term.
“We regard the decline in gold and silver prices to be a healthy correction following their previous steep rise,” they said. “We do not expect any prolonged correction, as the general situation is clearly favorable for gold and silver.”
The German bank remains bullish on gold as the COVID-19 pandemic continues to devastate the global economy. They added that the U.S. remains particularly vulnerable as the number of cases continue to rise at record levels.
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With all the economic uncertainty caused by the coronavirus, Commerzbank said that it expects the U.S. government and the Federal Reserve to maintain significant stimulus measures.
“US Democrats are already calling for additional corona rescue packages. It remains to be seen whether the Republicans will block such additional aid ahead of the congressional elections in November,” the analysts said. “The deficits in the US national budget, which had already increased massively, are thus likely to get even bigger. The US Federal Reserve is also likely to remain in demand to tackle the crisis.”