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The momentous scale of monetary and fiscal countermeasures to support the global economic recovery are likely to extend the duration of the gold bull market, according to analysts at Deutsche Bank.

Key quotes

“The date of policy tightening is pushed out indefinitely, and policymakers will be careful to avoid triggering a second taper tantrum.”

“The growing consensus that the pandemic will be largely deflationary with weaker consumption outweighing lower productivity, suggests policymakers will not have to choose between supporting growth and controlling inflation. If policymakers indeed face no such difficult choices, then the prominence of central bank support for asset markets reduces the probability of a repeated ‘March-madness’ sell-off, in the event of subsequent waves of infection depressing growth.” 

“With prolonged downward pressure on growth, asset purchase programs are more likely to be extended to provide a counterweight to lost income, higher propensity to save, and a weak investment climate into 2021. We believe this also extends gold upside potential.”