04.09.202012:03 Forex Analysis & Reviews: World Gold Council publishes bullish forecast for gold

The World Gold Council has recently published some interesting reports for gold. Among which is the July Investment Bulletin, which noted:

Central banks are aggressively cutting interest rates, often in conjunction with quantitative easing and other unconventional policies. Governments have also approved massive aid packages to support their local economies, thus, much more may be required. These initiatives have heightened fears that easy money, rather than fundamentals, is fueling the stock market rally, and that all the extra money pumped into the system could lead to very high inflation, or at least a currency depreciation.

The WGC (World Gold Council) correctly predicted this price correction, but given that the last round of bullish growth in gold happened very quickly, the organization believes that further growth could still occur in the yellow metal. One argument to support this claim is the sharp rise of gold amid the COVID-19 pandemic, which could still increase even more due to the current macroeconomic environment. Meanwhile, another argument suggests that the inflation-adjusted price of gold is still well below the 2011 or 1980 levels, since the current price chart indicates that gold is still about 9 and 18% below the previous highs displayed in the dollar in 1984.

Thus, many analysts believe that gold still has a lot of potential. For example, Nicholas Johnson, PIMCO portfolio manager specializing in commodities, said that the real price of gold is currently below the levels of the 2008 financial crisis.

So, the current economic crisis, which could well lead to higher inflation, may become a good impetus for gold prices to rise.

Low interest rates, increasing money supply, faster turnover in money supply, and an overall rise in money supply is the ideal background for inflation, which, incidentally, is also the perfect combination for making gold more expensive.