The price of gold continues to rise, reaching its highest level in seven years amid ongoing concerns that the coronavirus pandemic will have devastating effects on the global economy and increasing demand for asylum assets. Gold price is rising due to coronavirus pandemic, which sent many economies across the world into recession and forced institutions to release huge incentives. And after being hit by a massive sell out a month ago, the precious metal is enjoying a strong recovery.
Gold futures are now targeting 1,800 USD per ounce, after trading about 1,400 USD less than four weeks ago. The spread over the spot price remains wide. Today, the price of gold hit 1,784.85 USD per ounce, its high level since October 2012. Gold has risen 17% since the beginning of the year, 10% less than the record set in 2011.
“Risk sentiment is turning toward the cautious side, and investors are fleeing into the perceived safe-haven in view of the virus situation and massive money-printing activities,” Margaret Yang, an analyst at CMC Markets Singapore Pte, said in a note cited by Bloomberg News.
Banks, among which the UBS Group has increased its price targets for the precious metal, relying on the eased monetary policies and incentives as a whole, as well as low-interest rates, will support growth. At the same time, with the start of the new reporting season, investors will expect to understand just how severe the pandemic’s impact on profits is and what this quarter will look like.
The latest rise in gold is a fact, despite the data that the rate of spread of coronavirus infection is slowing, with the focus now shifting to when and how stringent measures to curb people’s movement and work can be eased. Earlier Monday, US President Donald said he had “total” power to allow individual states to ease social distance measures and rebuild the economy.
Another significant factor that contributes to the current gold rally is that major central banks are continuing to by gold in their reserves. Central banks globally added another 36 tons of gold to their reserves in February, according to the latest data released by the World Gold Council (WGC). That was about 33% higher than January’s total. On the year, central banks have bought 64.5 tons of gold. That compares to 116 tons through the first two months of 2019. Central bank demand came in at 650.3 tons in 2019. That was the second-highest level of annual purchases for 50 years, just slightly below the 2018 net purchases of 656.2 tons. The WGC said it expects central banks to remain net-buyers of gold in 2020, but likely at a slower pace than the record levels we’ve seen over the past two years.
Growth is also observed in other metals. The price of silver jumps by over 2.6%, the price of platinum by nearly 1.7%, and palladium rises by nearly 0.85%.
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