A slight correction on the gold market


At the beginning of 2019, analysts predicted a turbulent year 2020 in terms of gold ... and they were not mistaken! The yellow metal had the wind in its sails, especially fueled by the Covid crisis and its impact on the world economy.

Gold hit a new historic record of 1633eur an ounce on 18/05/20… the figures then suggested an economic crisis as serious as that of 1929. The stock market which lost between 30-40% in mid-March was the main driver of this increase. It discouraged investors who logically took refuge in gold.

Subsequent decisions by governments and central banks in hopes of supporting the economy and limiting the damage this time supported the markets. The ECB decided to launch an emergency purchasing program in the face of the pandemic (Pepp) amounting to 750 billion; amount that it could moreover revise upwards this afternoon.

The portfolio managers, also trying to limit the damage, (logically?) went back to the stock market and, in return, sold their gold in order to take their profits.

This explains the current correction of the ounce of gold which is around 1520 eur today.

Another element which explains the fall of gold in EUR is the fall of the dollar whose price has passed on March 19 from 1.0680 to just over 1.1250 today….

A fall in the dollar coupled with a fall in gold is mathematically damaging to us Europeans.

However, we remain confident in the protective nature of this precious metal….