There are signs late this week that a switch back to a more risk averse sentiment might be beginning in the markets, which would boost demand for gold as a safe haven asset.
Despite the pace of vaccine roll out in richer nations such as the UK and USA, the EU bloc continues to lag behind and infection rates remain stubbornly high in America, India and across Latin America. With India this week recording the world’s highest ever case number yesterday (Thursday), stock markets are taking on a gloomier air.
The Dow Jones and S&P 500 were both down yesterday on COVID infection news, with the NASDAQ also reporting six new lows.
Cornerstone Wealth’s chief investment officer, Cliff Hodge says now is the time for investors to begin removing risk – something which could trigger an uptick in gold. He said, “Even with better-than-expected results from airlines this morning, at these elevated valuation levels, the market may have some agita digesting the cross currents from negative virus headlines.
“As we get closer to the slower season, investors should start thinking about taking some risk off the table if they have not done so already.”
Expect gold to be strong on risk adverse demand, as we have seen throughout this pandemic. Buy now to get in before prices rise.