IMF Report Predicts Further Upside Potential to Gold Prices

SEATTLE (Scrap Monster): The Global Financial Stability Report published by the International Monetary Fund (IMF) highlights the relevance of gold as a safe asset, especially in the midst of rising risk levels among multiple global metrics including the worldwide stock markets. The report notes that there are clear reasons to believe that gold will move upwards. It advises holding gold in the near term and long term.

According to IMF report, gold has declined by as much as 11% from its April ’18 high. Also, the year-to-date gold price is down by around 7% when compared with 2017. This downfall is mainly on account of the 7% jump in U.S. dollar prices, which have acted as a major headwind for gold since the second quarter this year. Historically, gold and dollar prices follow inverse correlation pattern.

The report hints at stronger growth to world economies in the future. The improvement in developed market economies and rising dollar strength may boost investments in stocks and other riskier assets. However, the uneven global economic recovery coupled with long-term negative impact created by trade wars could bring the investors’ focus back to gold. The unprecedented rise in global debt position and stretched market valuations may also act as triggers for gold price boost. Further, the report highlights that gold is often entered at during crisis times.