A gloomier than expected Global Growth Forecast has handed a double digit boost to gold, underlining just how attractive the yellow metal is in times of uncertainty and less favourable economic conditions.
The latest report from the International Monetary Fund (IMF) sees its 2021 forecast revised down from the 6% it cited last July down to 5.9% as a result of several factors casing headwinds around the world. They include the well-documented supply chain issues plaguing some nations, the spread of the Delta variant and price squeezes. The IMF also warned that this figure is a correlation of data which means that in practise, some countries have seen their growth forecasts downgraded more considerably, with additional declines also possible, such as in the USA.
It said, “This modest headline revision, however, masks large downgrades for some countries. The outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics. The downgrade also reflects more difficult near-term prospects for the advanced economy group, in part due to supply disruptions.
“Overall, risks to economic prospects have increased, and policy trade-offs have become more complex. The dangerous divergence in economic prospects across countries remains a major concern.”
The IMF also called out inflation levels, saying that while growth is declining, inflation remains “skewered to the upside”.
With markets reacting as expected to the unsettling verdict, gold posted double-digit gains, adding more than £8.80 ($12.00) to hit £1,297.66 ($1,768.60). With this rapid increase underlining once again the strong demand for gold, act fast.
