The price of gold rises again after experiencing its weekly decline in the market. That strengthening was happened on Wednesday. It seems that many investors really wait for the nees from the United States due to a stimulus package.
The news spread said that the America’s government will give up to $1.9 trillion fund. That was recommended by Joe Biden as the new president there. The gold rises up to 0.15% in the market and it becomes $ 1,844.00. What is the cause?
The movement of this commodity followed the news last night about the United States GDP. It is reported that the GDP was contracted for about 3.5% for the whole year of 2020. That is the worst contraction since 1946 or after the second world war.
The Coronavirus Has the Huge Impact
Everyone knows that the America’s economic work in 2020 is not too good. Meanwhile, the existence of coronavirus and long pandemic are having the huge impact on all aspects. Gold has its lowest level in 2009. That is based on The World Gold Council.
The pandemic and its wide impact are the supporting factors of why the consumers’ demand in 2020 is low. The peak is when this commodity was slipped up to 14% for the yearly demand. That was surprising the investors.
Without the quick action, they take a risk of the economic crisis which is continuously happened. This situation could make the people of America are harder to work again and start everything normally just like before the pandemic. That was stated by Brian Deese.
He is the economic advisor of White House. The gold investors will find any clues about the package movements and other crucial steps needed to handle the COVID-19 impact. IMF or the International Monetary fund stated a thing about this.
The Fiscal Expenditures May Be Needed
Furthermore, IMF stated on Thursday that the fiscal expenditures may be needed to limit the economic impact due to this pandemic. The increase of fiscal purchase and the output decline have been making the debt level rose at its highest level.
It was happened in so many countries. The facts about a low interest rate and the present growth will stablize the debt level in most countries. However, it is still essential for them to have the fiscal framework, especially in the middle-term level.
It will ensure that the debt is stil continued. Elsewhere, Pound has its highest level in more than two years. That was happened on Thursday. However, the experts recommend for not having too much optimism amidst the British economic uncertainty. What is the reason?
It is because the decline could be worse since the lockdown is extended. For your information, the GBP/USD increases for about 0.39% and it reaches the $1,3740. That is the highest level since March 2018 or for about more than three years ago.
Is Sterling’s Optimism Overblown?
The fact is yes and many people agree with that. The optimism is overblown and they see the expectation risk which is dissapointing. That is why; they remind people to aware of the further sterling increase that may happened in the global market.
Pound has been in its optimism waves for some weeks. It is after British and UE avoid the not-deal brexit. However, several questions are remaining due to the British economic situation and Brexit. It is also about the extended lockdown decision.
Boris Johnson as the Prime Minister confirmed that the lockdown will be extended for five weeks. It means that the rule will be applied untik 8 of March. The government wants to handle the virus and gives time for vaccines until they are launched.
The risk of that decision is a high uncertainty. It is hard to predict how this pandemic will be developed, especially in a short-term. It is also difficult to know when and how fast the limitation can be reduced in the future.
