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Stocks Climbs With Gold, Analysts Thinks It’s Just the Start

Global stocks further rally as optimism for an economic recovery overcomes mounting coronavirus cases. However, analysts are still bullish about investor appetite for gold in the following months.

On Thursday, China’s stocks extended its gains. This is along with the help of the Shanghai Composite Index, leading Asia’s equity markets higher. This happened after Monday’s front-page editorial in the state-owned China Securities Journal. A lot of investors identified it as an official encouragement to purchase stocks.

Also, European stocks traded in positive territory during morning deals. On the other hand, Wall Street’s tech-heavy Nasdaq notched in another new record, closing high in the last session.

This arrived as market participants appear to be hoping that a massive emergency stimulus measures might soon see its way through to corporate earnings.

It also comes while investors still sought safety amid pandemic concerns, and gold prices on Wednesday soared over the technical level of $1,800 per ounce for the first time since 2011.

The CEO and Chairman of Galaxy Digital, Michael Novogratz, said, “The macro set-up is so perfect for something like gold.”

He also stated that the Federal Reserve and central banks globally would keep printing more money. Thus, gold is going to take out the old highs. After, this, the process will keep going. Novogratz believes that they are just starting the move.

The CEO and Chairman explained that people in the markets are in an irrational exuberant zone. But it isn’t easy to find out where that stops, and he describes this as being in a bubble.

Recently, spot gold futures traded at $1,813 per troy ounce. This has increased by about 0.2% for the session.

 

The Market and Gold

Generally, the market pours its attention on worries over the surging number of coronavirus cases. On Wednesday, global COVID-19 infections rose to more than 12 million, surpassing half a million related deaths.

In addition to that, the global health crisis has prompted central banks around the globe to unload large emergency stimulus measures in an effort to stimulate an economic recovery.

Traditionally, they use gold as a hedge against inflation, and prices usually move higher as economic conditions deteriorate.

But, slightly counterintuitively, global stocks and globe prices are seen to be moving higher at present.

Some analysts say that a stimulus from central banks and the extra money supply leaves gold well-placed to rally in short and long-term positions.

The CEO of Crossborder Capital, Michael Howell, explained, “What we urge investors to do is start to diversify and the one asset that is bound to go up a lot more is gold.”

According to Howell, the concurrence of the U.S. Federal Reserve and China’s central bank, both elevating into markets, was magic news for the yellow metal. He also expects gold prices to jump to as high as 50% over the next 18 months to reach $2,500 an ounce.

Now, putting that forecast into context, Bleakley Advisory Group’s Peter Boockvar noted in research that he thinks this would place gold within touching distance of an inflation-adjusted record high.

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