What are the prospects of gold trading in pandemic?

Uncertainty about the end of the coronavirus pandemic has hit a harsh blow on the global economy. Oil prices have turned negative for the first time on record, the construction market is stagnating, while the US dollar and the Euro are losing their resilience. More and more investors are shifting their attention to gold, the tried and true safe-haven asset. In fact, market participants are not trying to keep their money safe, investing in the precious metal, but they want to benefit from it. Some analysts suppose that under the current conditions, gold trading could bring decent profits*.

At the end of April, gold prices reached another local high of $1,738 an ounce. However, the precious metal failed to climb higher. Nevertheless, markets are still waiting for a jump. Traders agree that gold may break the level of $1,870 by the end of May.

Experts at Goldman Sachs also share this opinion. The bank’s experts emphasize that the bullish momentum in XAU/USD is not lost. Moreover, they forecast that the already high investment demand for gold may advance due to low key interest rates imposed by central banks worldwide. At the same time, gold prices are boosted by rapidly rising demand for physical gold in China and India. The fact is that industrial sectors of these countries use gold in their production. But that is not all. Traders prefer buying gold amid the inflation risks which arose after financial regulators from various countries performed unprecedented infusions of cash in order to cope with the consequences of the coronavirus spread and lessen its impact on the global economy.

Cui bono? As this Latin phrase suggests, the reason behind any perturbations can be connected with those who would benefit from it. If there were someone to blame for the current situation with the coronavirus spread, gold bulls would have been the prime suspects.

What to expect from gold at the end of spring and at the beginning of summer? Gold prices are likely to go on climbing even amid easing of the current coronavirus lockdown. For example, such US states as Alaska, Georgia, and Oklahoma are already easing restrictive measures for some private companies and for the whole corporate sector. Moreover, the Governor of New York, the hardest-hit state, announced that the region would start reopening its economy in the second half of May. Authorities of Italy and Belgium have already started easing lockdown measures whereas France intends to follow their steps any day now. Amid such news, gold prices would have presumably reversed because this spring, gold traders base their trading decisions on fundamental analysis and the news day trading strategy. However, a strong upward trend of the precious metal shrugged off the news about the current and future easing. Thus, analysts are focusing on new risks. At the moment, it is not pandemic that makes market participants choose gold, but it is fear of economic uncertainty. Nowadays, economists cannot even predict how interest rates, exchange rates, and investment attractiveness will change in the future. Under such conditions, gold may serve as a good safe haven. With all the investors flocking into this haven, gold has every chance of becoming the asset of choice for those seeking to make hefty profits. Forex traders are not an exception as many brokers provide an opportunity to trade gold CFDs.