New Corona shock: How does Gold react?

A viral mutation sends European stock markets down. A gold price breakout was initially thwarted on Monday.

New Corona shock

The Christmas week begins with falling shares and a strongly fluctuating gold price. The stock market is not a one-way street. If everyone is of the opinion that prices can only continue to rise, the damper is pre-programmed. What triggers the correction in the end is almost irrelevant. Over the weekend, it became known that a mutation of the COVID-19 virus is spreading in the UK. Allegedly even more contagious than the known pathogen. Now borders are being closed and lockdown measures are being tightened. Hopes for a foreseeable end of the Corona crisis are lost. And this, despite the start of mass vaccination in the U.S. and U.K., and expected vaccine approval in Europe. In the USA, Congress has now passed a second stimulus package. With this news, further previously pent-up share price imagination may be lost.

Gold price battered

The gold price had recently encountered important resistance in the area of 1,900 U.S. dollars. Early Monday morning, it looked for a short time as if gold could benefit from the new uncertainties. But in the later course, the precious metals finally came under pressure again. Until shortly after 11 a.m., the price on the spot market slumped to 1,855 U.S. dollars. The gold price then recovered slightly. At 1:30 p.m., a troy ounce of gold on the spot market cost US$1,879 (-0.1%). This corresponded to 1,543 euros (+0.6%). In contrast, silver was up to 2.4 percent higher in the afternoon at 26.24 U.S. dollars and 21.53 euros, respectively.

Outlook

A gold price increase in the coming months seems pre-programmed, even if the precious metals can come under pressure in the short term. As have repeatedly experienced in the past, gold and silver can also suffer in a market panic. Speculative capital is withdrawn. Possibly there are also interventions on the part of monetary policy. That for spoke on Monday the fact that the gold price remained depressed, while silver rose significantly. But if new uncertainties and economic risks emerge, a flight of many investors into gold and silver will be inevitable. Because the (monetary) policy will try to fight every further escalation of the crisis with the always same means. Even more money will be printed and the purchasing power of all currencies will be systematically decimated. And for this there is an important gauge: the gold price!

Translated with www.DeepL.com/Translator