In a world full of negative yielding debt, hard assets like gold could become even more attractive.
TD Ameritrade strategists believe the many years of unconventional and easy monetary policy from the world's central banks has resulted in a shortage of "safe assets" and that's "evident by the fast growing pile of negative yielding debt, which is ultimately leading to a growing appetite for precious metals."
Bank of America Merrill Lynch's metals strategist Michael Widmer, in a note, also says negative yields are making gold shine. He said the successive rounds of monetary easing driving bond yields lower and creating $14 trillion in negative yielding debt have also been recently supported gold prices. "With more easing to come, the dynamic will likely sustain a bid for the yellow metal," he wrote.
"At the same time, and perhaps perversely, such a sell-off may prompt central banks to ease more aggressively, making gold an even more attractive asset to hold. We have a relatively conservative 2Q20 forecast of $1,500/oz, but in this scenario, we see scope for gold to rise towards $2,000/oz," he wrote in a note.
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