Investors Expect Gold Prices to Keep Rising

Since the beginning of the year, gold has been appreciated by 24%. The precious metal is outperforming the leading world stock indices.

Gold is a long-term asset, showing its best version in the long term. Its evolution from January 2019 to now (+54%) far exceeds that of the Dow Jones Industrial and the Nasdaq. Investors think that the yellow metal will continue to rise. The foreseeable continuation of international geopolitical instability indicates it. Besides, a viable vaccine for Covid-19 is not found yet. Gold is an active safe-haven asset used in times of instability like the current ones.

The global debt caused by COVID-19 stands above $272 trillion

The Institute of International Finance (IIF) announced that the Coronavirus has caused global debt to rise by $15 trillion, to a total of $272 trillion. The international body expects the debt-to-world GDP ratio to close the year at 365%. Closing higher compared to 320% at the end of 2019.

The increases recorded in previous years were much more moderate and were led by the indebtedness of private corporations. 2020 will close with an annual increase in debt that doubles that of the previous year and is led by state administrations. The United States has accounted for almost half of the increase in world debt in 2020.

The financial institution has pointed out that the increase registered between January and September in world debt represents an unprecedented rise. Both governments and companies around the world are immersed due to the methods both public and private sectors plan to implement to deal with the Coronavirus.

The report of the Institute of International Finance has highlighted that this rate of debt accumulation will force the world economy to continue looking for ways to reduce the level of indebtedness in the future. 

Besides, the report shows a moderately optimistic outlook on the rate of global debt. However, Emre Tiftik, sustainability research director at IIF, has assured that the rise has been more significant than expected. Most of the debt “tsunami” occurred in the first half of the year when world debt increased by 42%. Meanwhile, in the third quarter, it grew only by 2%.