Unprecedented monetary policy action will boost long-term inflationary pressures, supporting gold's long-term uptrend; however, one market strategist said that investors should keep their eye on economic uncertainty to push prices out of their month-long trading range.
In an interview with Kitco News, Kristina Hooper, global chief investment officer at Invesco, said that although some economic data have improved recently, the global economy is still far from recovering from the devastation it saw as a result of the COVID-19 pandemic. She added that the threat of a second wave of the virus will be another headwind for the recovery.
"We are in an environment where definitely optimism is improving about a V-shape recovery. But… it's probably misplaced," Hooper said.
Along with the current COVID-19 pandemic, Hooper said that investors are now dealing with rising geopolitical tensions between North Korea and South Korea and even growing political uncertainty in America ahead of the 2020 elections.
"Anything can really be a catalyst for gold going higher. Anything that is viewed as somewhat disruptive," she said. "Certainly the break-even rate on inflation has improved since the bottom in March, but the reality is that there are a lot of different factors impacting gold prices. I wouldn't focus on inflation as the one likely to move gold up from here."
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