The Gold continues to soar, hitting a seven-year high $1703. The expectations of an economic downturn intensify Let investors choose gold as a hedge. Many countries launch large-scale stimulus measures. More and more investors are comparing the current situation with the financial crisis 10 years ago. They believe that gold prices can reach new high record in the future.
Comparison of the measures taken by the United States to deal with the Subprime Crisis in 2008 and the crisis in 2020:
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During the Subprime Crisis in 2008, the starting point of interest rate reduction was 5.25%, and the starting point of 2020 crisis was 2.5%. During the Subprime Crisis in 2008, the Fed cut interest rates 10 times to zero. On March 15, 2020, the Fed announced that it would cut the federal funds rate by 100 basis points to 0-0.25%. Interest rate returns to zero again. The space for this interest rate cut is significantly smaller than that in 2008.
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Inject funds into the market, namely Quantitative Easing (QE). On November 25, 2008, the Fed opened the first round of QE until the third round officially ended on October 29, 2014. By QE3, the Fed had purchased more than $3 trillion in assets in three rounds QE. On March 23, 2020, the Fed announced unlimited purchases of treasury bonds and mortgage-backed securities, and began to inject funds into the market. This unlimited QE far exceeds the Subprime Crisis in 2008.
Many institutions predict that the increase of Gold price will exceed the level of 2009-2012. From Gold price $1450 after the unlimited QE, how much raising space is there for the future?
From the technical point of view, Gold has effectively broken through $1700, opening up space for the future target to $1800. In the follow-up, we will focus on the resistance near $1750 and $1790 levels, because these levels are at the stage high in 2012. If the short-term callback, $1700 has been converted into support, in any case, it is only the oscillation in the bull market.
After QE in the last financial crisis between 2009-2012, Gold rose by $1200. This unlimited QE in 2020, even though only half of the last time is $600. $1450+$600=$2050 Gold is expected to rise by $2050.
In 2020, gold will rise to $2000? Let’s see what happens.