Commerzbank: 'gold should remain in demand as a crisis currency'
(Kitco News) - The pullback in gold prices early Monday likely will not lead to any prolonged weakness and the metal should remain sought after by investors as a “crisis currency,” said Commerzbank. As of 8:24 a.m. EDT, spot metal was $9.80 lower to $1,719.70 an ounce. Sentiment in financial markets is improving as countries relax strict confinement regulations instituted during the COVID-19 pandemic,said analyst Carsten Fritsch. “However, we do not see this as any reason for gold to experience a prolonged phase of weakness,” he said. “Even when the lockdown is lifted, the world will still be far from any kind of normality. In fact, the bigger risk then is economic collapse, as indicated by the disastrous economic indicators virtually everywhere. To counter this, governments around the globe are likely to continue spending unparalleled sums of money – most of which will be created by the central banks.” Fritsch commented that neither the U.S. Federal Reserve nor the European Central Bank is likely to decide on any further measures for now at their meetings this week. “That said, what they have already approved is so far-reaching that hardly any more is even possible,” Fritsch continued. “Gold should remain in demand as a crisis currency in this environment, as reflected in ongoing ETF [exchange-traded-fund] inflows.”