- As rising optimism over the vaccine campaign and the reopening of the economy continues to grow, the excitement in gold has been significantly falling in recent months.
- However, major LT drivers such as real rates and the total amount of negative-yielding debt are pricing in higher gold prices.
- Investors are currently underestimating the risk associated with the pandemic; more liquidity will be needed to support the economy.
- The downside risk remains limited (13% max drawdown) if we retest 1,615, but another rally on gold is inevitable.
For further details see:
Gold: Limited Downside Risk, Strong Upside