The pandemic of 2020 would soon show itself to be the driving force behind one of the most ferocious rallies the gold market has ever seen. At the close of trading in New York on Friday, bullion had spiraled to $1,902.02 an ounce, some 30 percent higher than the low it hit in March and just one percent off a record high set back in 2011, Bloomberg reported.

The virus has unleashed a torrent of forces that are conspiring to fuel relentless demand for the perceived safety from turmoil that gold provides. There’s the fear of further government-ordered lockdowns; and politicians’ decision to push through unprecedented stimulus packages; and central bankers’ decision to print money faster than they ever have before to finance that spending; and the plunge in inflation-adjusted bond yields into negative territory in the US; and the dollar’s sudden decline against the euro and yen; and rising US-China tensions.

All these things, when taken together, have even triggered concern in some financial circles that stagflation — a rare combination of sluggish growth and rising inflation that erodes the value of fixed-income investments — could take hold across parts of the developed world.

In the US, where the virus is still raging and the economic recovery is stalling, this debate is growing louder. Investor expectations for annual inflation over the next decade, as measured by a bond-market metric known as breakevens, have moved higher the past four months after plunging in March. On Friday, they hit 1.5 percent. And while that remains below pre-pandemic levels and below the Federal Reserve’s own two percent target, it is almost a full percentage point higher than the 0.59 percent yield that benchmark 10-year Treasury bonds pay.

The main driver behind gold’s latest rally “has been real rates that continue to plummet and don’t show signs of easing anytime soon,” Edward Moya, a senior market analyst at Oanda Corp., said by phone. Gold is also drawing investors “concerned that stagflation will win out and will likely warrant even further accommodation from the Fed.”

US bond markets have been a driving force behind the rush to gold, which is serving as an attractive hedge as yields on Treasuries that strip out the effects of inflation fall below zero. Investors are looking for safe havens that won’t lose value.

The mania for gold right now has trickled down to Main Street. Retail investors have helped put ETF holdings backed by gold on track for an 18th straight weekly gain, the longest streak since 2006. Meanwhile, gold posted its seventh weekly gain on Friday, and analysts don’t expect the increases to end anytime soon.

“When interest rates are zero or near zero, then gold is an attractive medium to have because you don’t have to worry about not getting interest on your gold,” Mark Mobius, co-founder at Mobius Capital Partners, said. “I would be buying now and continue to buy.”

Analysts have been predicting huge upside for gold for several months. In April, Bank of America Corp. raised its 18-month gold-price target to $3,000 an ounce.

“The global pandemic is providing a sustained boost to gold,” Francisco Blanch, BofA’s head of commodities and derivatives research, said, citing impacts including falling real rates, growing inequality and declining productivity. “Moreover, as China’s GDP quickly converges to US levels helped by the widening gap in COVID-19 cases, a tectonic geopolitical shift could unfold, further supporting the case for our $3,000 target over the next 18 months.”

Bank of America’s bold prediction was made after gold prices initially dropped in March as investors sought cash to cover losses on riskier assets. Prices quickly recovered after a surprise cut to the Fed’s benchmark rate and signs that the economic toll of the coronavirus would lead to massive stimulus efforts from global governments and central banks.

This isn’t the first time gold has gotten help from central bank stimulus programs. From December 2008 to June 2011, the Fed bought $2.3 trillion of debt and held borrowing costs near zero percent in a bid to shore up growth, helping send bullion to a record $1,921.17 in September 2011.

The crisis a decade ago was all about banks, said Afshin Nabavi, head of trading at Swiss refiner and dealer MKS PAMP Group, who now sees gold “pointing towards $2,000.”

“This time, to be honest, I do not see the end of the tunnel,” he said, at least until US elections in November.

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2020 has been the hotbed of events which has made political and economic predictions more complicated in some countries. World’s tackling and reacting to the poverty, resulted from economic incapability and providing livelihood for majority of people on the earth because of the Coronavirus pandemic and social distancing, has essentially been hidden and unimaginable.

IRAN NEWS POLITICAL DESK

The capitalist countries which are run based on the liberalism school either politically or economically have shown more misery comparing to other countries in terms of tackling with poverty and unemployment. The U.S. which is proud to lead the world in having capitalist system has stuck in a disastrous condition that the lines of its hungry people are miles-long, and according to a saying, it is just the beginning.

A poll conducted by Reuters from 250 economists worldwide indicates that Coronavirus-related economic recession is deeper than previously predicted. One of the respondent was Ethan Harris, head of global economics research at BofA, who said, “In many ways the outlook for the global economy resembles an obstacle course. In the first step, the economy falls into a big hole, starting in China in Q1, most of the rest of the world in Q2 and extending into Q3 in some emerging markets.” He continues, “The second step is trying to reopen the economy without re-igniting the disease. The third step is dealing with the lagged impact of confidence on durable goods spending, the risks of a premature maxing out of fiscal and monetary stimulus, and a trade and tech war waiting in the wings.”

Almost three-quarters of economists, participating in the poll taken by Reuters, said the recovery would be either U-shaped, with a prolonged trough, or like a tick mark where the speed of the recovery is not as quick as the drop-off.

Only 15 respondents predicted a strong, V-shaped recovery. The others said it would be W-shaped, where a vigorous rebound results in another sharp slump, or L-shaped where the economy flatlines after the downturn.

The world economy is now forecast to shrink 3.2% this year, compared to a 2.0% contraction predicted in the April 23 Reuters poll and -1.2% forecast in an April 3 poll.

No economist polled expected growth in 2020, with forecasts in a -0.3% to -6.7% range. The outlook under a worst-case scenario was -6.0%, with those in a -3.0% to -15.0% range.

This prediction comes as early forecasts for global economic growth tended to range from 2.3% to 3.6% before the pandemic struck. Of course Reuters’ poll shows that the global economy was expected to grow 5.4% next year, according to the latest poll, faster than the 4.5% predicted last month.

Economies’ of India and China are expected to bounce back to grow sooner than other states and Japan with some “ifs” can enjoy comparative growth.

Iran, by balancing its liquidity deficit through selling state properties provided that the money is invested in productive and generative affairs and increasing the volumetric rate of gross domestic production (GDP, can experience below one percent growth rate. The way how to handle the oil sanctions and sales of crude and oil products is very crucial for Iran. Europe and especially Switzerland can take advantage of Iran’s intact market by restoring bilateral banking relation to appease concerns about more recession. And this all relies on the foreign policy in the government in the post-President Rouhani’s era.

 By: Hamid Reza Naghashian

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UN head released his warning of COVID-19 impacts in a policy brief, saying the pandemic-induced economic contraction is having “disastrous consequences,” greater than the Great Depression, including on the ability of countries — and not just low-income countries — to sustainably carry debt.

The brief said both middle-income countries, with 75 percent of the world’s population and 62 percent of the world’s poor, are also highly vulnerable to a debt crisis, lost market access and capital outflows.

While in the best-case scenario, recovery in developed countries’ economies may start by the end of 2020 and then reverberate to developing countries, it is also possible that this may be the start of the worst economic downturn since the Great Depression, said the secretary-general.

Speaking at the virtual World Bank and International Monetary Fund spring meetings on “Mobilizing with Africa,” Guterres said that during this crisis the African Union and the African continent have shown unity and leadership — two of the most scarce commodities, Xinhua news agency reported.

The secretary-general warned that, as with the climate crisis, the African continent could end up suffering the most from the crisis.

Deputy Secretary-General Amina Mohammed spoke by video to the Group of Friends on Food Security and Nutrition.

She told them that, in the face of the current pandemic, it will not take much to tip millions of more people into food insecurity. An economic shock on the scale expected presents a real and present danger.

The Food and Agriculture Organization, the African Union and international partners have issued a joint declaration in which they support access to food and nutrition for the most vulnerable in Africa during the pandemic.

They described the food and agriculture system as an essential service that must continue to operate during periods of lockdown, curfew and other containment measures.

“We have launched a Preparedness and Response Plan which required 38 million US dollars for humanitarian, as well as social and economic recovery needs,” UN Spokesperson Stephane Dujarric said.

“This Plan has been presented to national and international partners and will be updated shortly to include the government’s needs,” he said.

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The demonstrations seemingly began with a single spark. In Chile it was a hike in metro fares. In Lebanon it was a tax on WhatsApp calls. In Hong Kong it was a proposed extradition bill. Iran News qoutes the story about global protests told by CNN.

That’s the case in Chile, Lebanon and Hong Kong, he added. These are now “sustained protest movements, continuing even after their initial grievance has been met.”

Chile

A demonstrator is detained by the police during a protest in Santiago, Chile, on Saturday.

What’s happening? Chile declared a state of emergency in the capital Santiago after widespread protests sparked by the proposed price hike for subway tickets a little over a week ago.

At least 18 people have died in clashes between protesters and security forces. Shops and business have been looted and set on fire, and metro stations vandalized and closed to the public in widespread demonstrations over living costs and rising debt in the usually stable country.

What’s been the state response? President Sebastian Pinera announced the suspension of the price hike Saturday. On Tuesday, he apologized for “decades” of accumulated problems and announced a new social and economic agenda but it did little to quell the unrest.

The government has responded by deploying thousands of police and armed soldiers to put down the unrest — the first time the military has been deployed since Pinochet’s military dictatorship ended in 1990.

What’s the bigger picture? Chile is one of Latin America’s wealthiest countries, but it also has one of highest levels of income inequality in the world.

Many jobs are informal or temporary, with young people and women among those struggling the most to find quality, skilled work. Calls for wider economic reform over a number of issues including pensions, healthcare and public education show the cracks in the country’s progress since its transition to democracy.

Lebanon

An anti-government protester makes a victory sign, while holding a Lebanese flag and walking past blazing tires during a protest on October 18.

What’s happening? Hundreds of thousands of protesters have taken to the streets across the country for anti-government protests that began last Thursday.

The protests were sparked by a proposed 20 cents per day charge for voice over internet protocol (VOIP) use, a feature used by WhatsApp, Facebook, and other applications.

Very quickly, the proposed VOIP tax had morphed into a larger rallying cry for the downfall of the government and drew out the largest demonstrations the country has seen since March 2005, when mass protests ended a decades-long Syrian military presence in the country.

What’s been the state response? The government has now scrapped plans for the VOIP tax.

It also approved an ambitious program that slashes officials’ salaries by 50%, levies large taxes on banks’ profits, scraps further austerity proposals, and seeks to stem big financial losses in the electricity sector, along with other reform measures. But the reforms do not appear to be appeasing protesters.

What’s the bigger picture? People in Lebanon, buckling under the strains of a rapidly declining economy, are taking aim at what they see as crony capitalism. Decades of corruption and government mismanagement by the country’s sectarian leaders have come at too hefty a price, Lebanese protesters say.

Hong Kong

An anti-government protester throws a Molotov cocktail during a demonstration near Central Government Complex in Hong Kong, in September.

What’s happening? Hong Kong’s protests began in March, but they kicked off in earnest in June. They were sparked by widespread opposition to a now-shelved extradition bill that would have allowed extradition to China, but have since expanded to demands for full democracy and police accountability.

What’s been the state response? In September, Hong Kong leader Carrie Lam announced the withdrawal of the extradition bill after three months of large-scale protests, which have roiled the city and damaged its economy. That, however, did not stop the demonstrations.

What’s the bigger picture? Hong Kong belongs to China, but it has its own currency, political system and cultural identity. Many Hong Kong residents don’t see themselves as Chinese, but rather as Hong Kongers.

Ultimately, young Hong Kongers are concerned about China’s growing encroachment in the city — and the perceived threat to freedoms unavailable to Chinese mainlanders, such as the right to protest, the right to a free press, and an independent judiciary. This has led to the regular and increasingly violent protests in the usually peaceful city, resulting in more than 2,000 protesters arrested so far.

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