InvestorQ : Where gold is headed next? What are the key factors driving gold prices?
Mahima Roy made post

Where gold is headed next? What are the key factors driving gold prices?

2 years ago
Since last year, the price of gold has increased sharply by around $250/oz, with annualized returns of about 23%, falling in between one of the best performing classes of assets.

The key factors that drive the prices of gold are:

Interest rates are headed lower again. The Fed has turned typically neutral and the BOJ(Bank of Japan) and ECB(External Commercial Borrowings) have also expressed non-indulgence in monetary parting. Due to falling bond yields and global funds almost reaching negative yields debt, the opportunity cost for holding gold is just negligible; this could have a positive impact on gold prices.

Currencies have been debased for quite some time but it is yet to show up due to the exorbitant privilege that the dollar enjoys. Experts opine that if China is pushed to the wall, they could trigger a devaluation of the Yuan and create chaos in global currency markets. Historically, all economies lose in a currency war; but that is exactly when gold could be a gainer.
Weak growth in equity as an asset class isn’t really good news. Even China reported a 27 year low GDP. The IMF has already downgraded global growth by 70 bps for next year, which again indicates that the gold could gain.

The geopolitical and economic situation is currently full of uncertainties, which technically are favorable for gold demand and gold prices. To conclude, the gold tends to reach higher levels, as the factors prevailing in the economy directs mainly towards it.