Is it the right time to take a position in physical gold?

Investors have been disillusioned in recent months as the price slowly melts but they have recently seen their investment take 3% on a single day.

But what factors are at the base of such a rise?

Various elements may explain why gold may be rising in the near future:

Risk aversion:

Tensions and risks are piling up on the global economy. We mentioned Italy in our previous articles, the trade war between the United States and China, the Brexit, the sanctions imposed on Tehran and Moscow, Trump's threats to get out of the Nuclear ... All those factors have an influence on the behaviour of investors.

If one of these scenarios was to happen, there is no doubt that investors would find refuge in safe havens such as government bonds or physical gold.

A massive investment in government bonds would result in an increase in the price of these bonds, which would as a result cause a fall in interest rates. However, a fall in rates is favorable to the yellow metal whose cost of ownership would therefor decrease.

Gold would have resumed playing its role of safe haven on Wednesday, October 11th. The US stock market shifted, dragging the Asian stock markets and European stock markets in its wake and carrying the gold 3% higher only on this day.

The fall of the dollar:

The price of an ounce of gold in euros can vary according to two factors: the price of gold itself quoted in USD and the price of EUR / USD pair on the foreign exchange.

Central banks are slowly but surely changing their monetary policy. The ECB should toughen it while the FED could reverse its policy of rising rates as early as 2021.

A fall of the dollar against the euro would favor the gold and the decisions of the central banks go in this direction.

Markets are starting to integrate this information.

The trade war between China and the US would benefit gold:

The trade war looks like a new cold war for world supremacy. In the logic of risk aversion, portfolio managers and investors should review the weighting of their holdings which will increase their positions in precious metals and government bonds.

A sharp fall in the stock market could, however, see the following effect:

An increase in the dollar because of massive investments in what still remains a safe haven and massive purchases of gold, combining two increases that would as a result increase the price of gold in euros even more.