As global economies slip deeper into recession, there’s a bright beacon of hope on the horizon: gold. In the midst of all the uncertainty triggered by the Covid-19 pandemic, gold prices have been skyrocketing across the globe as international bullion markets are thriving. Investors everywhere are looking at gold as a safe investment haven in a world of chaos.
Gold prices have hit record highs this year. At the start of July, Forbes predicted that the precious metal would reach the critical $1,800 mark. By the penultimate week of July investors had already pushed prices beyond this to around $1,900, and by the end of the month the spot gold price on the NY Mercantile Exchange rose to over $1,944 an ounce. With this staggering increase of around 27%, it has beaten the previous record set in 2011 by over $20 and is performing better than almost all other commodity markets, stocks and bonds. With this momentum, it’s likely that gold will continue on an upward trajectory in the next few quarters.
Gold prices fluctuate because of various factors, for example:
The current extraordinary upsurge in gold prices is influenced by an interplay of all of these factors as well as international geo-political tensions, trade strife and pandemic-related disruptions. As Covid-19 continues to push international markets into one of the harshest declines in recent history, a general sense of insecurity prevails. This, and the ongoing trade tensions between the United States and China, are further contributing to these record-setting highs.
Even though this drastic rise is currently highlighted, the upward trend already began a few years ago. Current chaos around the world just intensified it. Since the final quarter of 2018, gold prices have been rallying and more gains have been recorded in the longest run since the financial crisis in 2007/8.
A continued upsurge in gold prices is largely dependent on the situation with the Covid-19 pandemic. Because there is no realistic prospect of a vaccination by 2021, local shutdowns around the world will likely continue, and so economic recovery may be limited. While this could spell disaster for companies and individuals around the world, gold investors will benefit. The pandemic’s devastation could mean a strong chance of percentage gains for the gold price in the near future. According to Goldman Sachs, the price of gold may even continue the upward trajectory all the way to $2,000. Indian jewelry brand PN Gadgill believes that it may even hit $2,500 in the international markets.