Gold Prices Go Parabolic To $1,740 Per Ounce After Fed Announces More Money Printing And Fiat Debasement
Gold prices have gone parabolic on safe-haven demand by investors jolted by worrying U.S. economic data and a mammoth Federal Reserve stimulus package amid a global economy that has lurched into a recession and possibly a depression.
The yellow metal price rose to a new seven-year high of $1,740 per ounce on April 14, according to Reuters.
The prices surged after the U.S. Federal Reserve announced a massive stimulus package to combat the economic toll of the coronavirus pandemic, Kitco reported.
Kitco is a Montreal-based precious metals retailer and supplier of refining services, labware for mineral analysis and devices for high-technology manufacturing processes.
“The Fed unveiled yet another howitzer from its arsenal, offering substantial relief to small and medium-sized businesses as well as municipalities,” Tai Wong, head of base and precious metals derivatives trading at Bank of Montreal, told CNBC.
“Gold’s rallying because this monetary largesse will eventually have to be repaid and that payment may come as sudden higher inflation somewhere down the road,” he said.
The Fed rolled out a broad, $2.3 trillion effort to bolster local governments and small and mid-sized businesses in its latest move to keep the U.S. economy intact as the country battles the coronavirus pandemic.
Demand for gold tends to benefit from widespread stimulus from central banks, as it is often seen as a hedge against inflation and currency debasement.
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Goldman Sachs believes that the price of gold will reach $1,800 an ounce over the next 12 months, while Fawad Razaqzada, a technical analyst at City Index, expects the metal to hit a new all-time high of $2,000 an ounce in 2020.
The price per ounce of gold on April 15 was $1,730.40.