Price of Gold Jumps Over $1,800, Setting New Record High

For the first time since 2011, Gold price jumps over $1,800 an ounce. Analysts also expect more gains as investors begin to stock up on the asset and hold its value while the coronavirus continues to ravage the global economy.

In the last 14 months, spot gold prices have jumped 40%, within a striking distance of $1,920.30 an ounce, the record high of 2011. The major impact on Gold price comes as a result of the economic and political uncertainties and activities caused by coronavirus. Actions taken by central banks to slash interest rates and flood the markets with cash have also contributed to the rise in gold price. As a result, there have been increasing fears of inflation, the devaluation of other assets, and lowering returns on government bonds, all of which now make gold more attractive.

“The near unprecedented fiscal and monetary peacetime response to Covid-19 supplies gold with two substantial bullish inputs: liquidity and debt. Low interest rates, monetary accommodation including balance-sheet expansion and heavy fiscal spending globally for the foreseeable future will cement and extend gold’s rally,” said HSBC’s Steel.

Investors from around the world, especially Europe and the United States are taking quick advantage of gold prices. Exchange-traded funds that hold gold for these investors have reportedly added 734 tons of gold which is worth approximately $39.5 billion, within the first half of the year. The year to date inflows into bullion-backed exchange-traded funds (ETF) topping the record full-year total.

“Western Investment has been the key factor supporting prices (and) there’s no reason for that to stop,” said Rhona O’Connell, StoneX analyst.

The attraction for gold continues to grow since gold futures finished at the highest since September 2011. Many investors have found a safe haven in bullion investment this year. According to a Bloomberg data compilation, Holdings in gold-backs Exchange-traded Funds rose to 3,234.6 tons on Tuesday, up 655.5 tons so far in the year, and exceeding the last record rise of 2009.

“A massive investor response to Covid-19 has pushed ETF holdings to record levels, the impact of which has outweighed the decline in jewelry demand and absorbed increases in recycling. Further inflows are expected as investors respond to elevated risks and low yields,” said Chief Precious Metals at HSBC Securities James Steel.

Goldman Sachs’ analyst also predicted that the price of metals could reach all-time records of $2,000 over the next 12 months, as bullion prices are expected to have more gains.

“We’ll be challenging the $2,000 level by the end of the year,” said independent analyst Ross Norman. “We are in a bull market for gold.”