Gold News: Negative Rates Fuel Increased Demand
Gold News
The positive long run that gold has had is thought to be due to the negative interest-rate monetary policies for some of the world’s key central banks, including the Bank of Japan and European Central Bank,which in turn, could change the way investors think about risk, according to a World Gold Council report released Thursday.
The report stated that in the long run, the negative interest rate policies that some of the leading countries adopt cold result in “structurally higher demand for gold from central banks and investors alike,”. In the past, it has been estimated that this period of time can be shortened.
Although negative nominal rates are unprecedented, the World Gold Council have looked at previous data and concluded that negative real rates show that gold returns tend to be “twice as high as the long-term average.”
And although “falling rates are generally linked to higher gold prices,” the rising rates are not necessarily linked to lower prices, it said.
