Coronavirus Concerns Galvanize Gold

Investors Anxious About Economic Uncertainty

Gold prices are on the rise and could hit their highest levels since 2012. This is due to several factors.

COVID-19 cases are increasing in states like Texas and North Carolina as lockdown restrictions ease. Investors are fearful that an increase in cases could cause more business closures and economic instability.

Investors are also predicting that central banks around the world may pump more stimulus money into their economies if coronavirus cases continue to increase. This could cause global currencies to be devalued, making gold an attractive investment option. Gold is also popular when interest rates are low, as they are now.

Gold Prices on Track to Break Records

On Monday, gold was trading at its highest level in almost eight years. Gold futures, contracts where a buyer agrees to purchase a specific quantity of gold on a specific date, are up 16% this year.

UBS (UBS) expects gold prices will reach $1,800 per ounce by the end of the year. According to Goldman Sachs (GS), the price of gold could even spike to a record $2,000 per ounce by the end of 2020.

A Self-Fulfilling Prophecy

Some financial advisors may suggest that their high net worth clients invest in gold. Nine private banks handling about $6 trillion for the world’s ultra-rich responded to a survey by Reuters saying they have advised clients to do this already. If wealthy investors pile into gold, thinking its worth will increase, this demand could create a self-fulfilling prophecy and cause gold prices to skyrocket.

Investors will have their eyes on coronavirus cases as well as monetary policies from central banks, to see how these factors will impact the rising price of gold.

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