Research: Gold optimism towards the end of summer

FIBO_Group

Master Trader
Jun 20, 2016
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- Gold ETFs have demonstrated the largest quarterly inflows in four years amid global uncertainty and financial market volatility. Reserves of these products reached a record level of 3,185 tons by the end of the first quarter. It was the influx of investments that helped raise the price of gold in US dollars to an eight-year high (global demand for gold reached 55 billion US dollars - the highest figure since the second quarter of 2013). The price also reached new record highs in Indian rupees and Turkish lira, in particular.
- The pandemic has reduced jewelry demand as governments around the world have introduced blocking measures. Demand fell to its lowest level in history, driven by a 65% decline in China, the largest consumer of jewelry and the first outbreak market.
- Central banks continued to accumulate gold, although we expect net purchases to slow down sharply. Amid increased volatility and uncertainty, world gold reserves rose 145 tons in the first quarter.
- The total supply in the first quarter fell by 4% due to the coronavirus (blocking the work of gold mines, shifts of workers were moved to facilities with significant interruptions).
Work was stopped in many projects in an attempt to stop the spread of the virus. By the end of the first quarter, processing of raw materials slipped to almost zero when consumers were limited in their homes.
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Given the desire of the head of the American state to maintain exports, coupled with a weak exchange rate of the national currency and the adopted package of measures to support the national economy in the amount of $3 trillion: we forecast cyclical growth by April 2022 to $2200 - 2500 oz. This will be the main support factor for gold mining companies in the future 1-2 years.
The best time to buy will be the end of summer: against the backdrop of economic recovery in the summer, the demand for protective assets will decline. I suppose that a local decrease in quotations by 4-7% ($1600 - 1650 per ounce) from the current $1720 oz will begin. Decline in jewelry demand until August-September; re-preservation and output of gold mines at full capacity.
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