On Friday the prices of gold rose and were on their way to the biggest weekly gain since January 2009. Due to the global spread of the coronavirus, gold growth prospects have dimmed and has sent investors looking for safe-haven assets.
Spot gold had gone up 0.5% at $1,678.25 per ounce. Before that, it got a high of $1,689.65, or 1.2%, its highest point since January 2013. So far this week, prices are up at around 6.3%. U.S. gold futures went up 0.5% to $1,679.50.
Peter Fertig, an analyst at Quantitative Commodity Research stated “The usual out of risky assets into safe havens” Concerns about the economic fallout from the virus is fuelling gold’s rise.
Earlier on Friday, the prices of gold reversed course and dipped alongside other commodities like oil. This happened after OPEC had reported a failure to reach a deal.
Along with oil prices gold dropped, down to 7% a multi-year low. Allies of OPEC reported rejecting more production cuts which were proposed by OPEC on Thursday, according to a news report from Reuters. Added on, there are also reported questions on whether the current production cuts will be extended, Reuters reported. A meeting between OPEC and its allies that go by OPEC+ is being planned in Vienna after talks were delayed.
SP Angel analyst Sergey Raevskiy stated “The market has no understanding of what’s going on. Investors are buying bonds as well as gold as insurance from the deteriorating economic outlook,”.
Worldwide, there have been more 98,000 cases and over 3,300 deaths due to the coronavirus. On Wednesday The International Monetary Fund explained the outbreak will hold 2020 global output gains to their slowest pace since the 2008-2009 financial crisis. The current epidemic poses “evolving risks” to the U.S. economy and because of this central bank officials are now monitoring developments closely.
The New York Federal Reserve President John Williams said on Thursday.
“Gold is looking to be one of the most attractive assets to own now as short term interest rates fall to near zero and most equity earnings are also expected to fall,”
Analyst for Phillip Futures said in a note. “However a drastic and prolonged drop in equity prices may not be good for gold as traders cash in from gold to pay off margin calls in equity.”
The U.S. Federal Reserve made a 50 basis point interest rate cut on Tuesday as an emergency. Lowing interest rates will reduce the opportunity cost of holding non-yielding bullion.
In addition, palladium went up 3.1% to $2,610.80 per ounce. The autocatalyst metal had hit the highest it has ever with $2,875.50 in late February.
Silver had gone up 0.2% to $17.45 an ounce, while platinum went up 4.1% to $900.08.
With the coronavirus effecting economies world wide, what does this mean for the prices of metals and gold? Author bio: Blair Thomas has been a music producer, bouncer, screenwriter and for over a decade has been the proud Co-Founder of eMerchantBroker, the highest rated Gold merchant account provider in the country. He has climbed in the Himalayas, survived a hurricane, and lived on a gold mine in the Yukon. He currently calls Thailand his home with a lifetime collection of his favorite books.