New Delhi, September 25: Gold is likely to continue its bull run as monetary and fiscal stimulus programmes have failed to rejuvenate the world economy, waning the dollar’s value as a safe haven against the yellow metal, a report says.
The GFMS report noted that the bull run in gold is possible as the various monetary and fiscal stimulus programmes have failed to boost the world economy, feeding through to a dis-inflationary conditions.
Earlier, it was expected that the stimulus packages would have encouraged investors
to seek out the security of US Treasuries, which would have boosted the value of the US dollar, negatively impacting the gold.
Gold and dollar generally trend in opposite directions.
The US dollar, which is considered a safe haven, softens due to weakening economic condition. As dollar declines, many investors and central banks continue to hold gold as their safe haven to protect themselves from unforeseen global economic shocks, boosting the demand for the yellow metal.
However, metals research consultancy GFMS Chairman Philip Klapwijk said: “We’re still favourably disposed towards the price in the medium term.
“That’s mainly because we see it as highly likely that debt monetisation and ultra-low interest rates, especially in the US, will at some point feed through to a build in inflationary pressures.”
–Agencies