What gold price needs now to sustain this momentum
In order for gold prices to move much higher, substantially more stimulus would be needed from the Federal Reserve, according to Steve Dunn, head of ETFs of Aberdeen Standard Investments.
“Is a $1 trillion enough? I would suggest that the market has already priced in something along those lines. Would $3 trillion be different to the market? Yes, I would argue that that may provide. So I think what that market is trying to understand is, who knows a little more information than what I have,” Dunn told Kitco News.
The Fed has already pledged to support the economy with accommodative monetary policy, Dunn noted, and inflation is the likely outcome.
“As the Fed has indicated, they’re willing to do whatever it takes to keep this economy from going backwards, and so they’ve created that backstop from that marketplace from that perspective, so I think this combination of monetary and fiscal policy has got to drive some type of inflationary factors at some stage,” he said.
An inflationary environment is supportive for gold, Dunn added.
“If you look at gold, specifically, you almost have created a perfect storm for gold to perform particularly well,” he said.
Dunn’s comments come as spot gold hit $2,000 an ounce for the first time ever, on Tuesday.