According to Richard Hayes, the CEO of Perth Mint, the gold outlook is upside since the world is facing a possible second wave of the Coronavirus outbreak.
The gradual easing of all the restrictions and reopening the businesses will undoubtedly have an impact on precious metals prices. According to The CDS and the WHO, there is a significant danger of a second Coronavirus wave. That will give the gold price a fair kick along.
Hayes stated he wouldn’t be surprised to see gold touching new record highs shortly. He added that the levels are not that far off in percentage terms from 2011-2012 all-time highs. Hayes thinks it is not going to take a lot to drive precious metal prices higher. It is more likely to see the previous highs being broken. It may not happen in summer, but it is possible to happen in the next year.
Unlimited stimulus measures central banks unleashed are another primary positive driver for gold prices. Hayes says that it is still unclear what impact the trillions of dollars being pumped into the world economy will have.
There is the talk that the latest round of stimulus is more inflationary. During the financial crisis of 2008-2009, there was an expectation of inflation, but it didn’t happen. This time, a lot of the money that is being pumped into the economy is ending up more on Main Street than Wall Street, Hayes said.
Besides, there is a reasonable concern over a high number of potential bankruptcies. A lot of small businesses ceased operating during the Coronavirus crisis with the hopes that they could reopen once the lockdown is over. However, there will likely be a whole wave of companies forced to go bankrupt. Banks will provision for doubtful loans or bad loans,” Hayes explained.
