Price of gold after outbreak
How about the price of gold after a pandemic? This simple question may arise in your mind at the time of the pandemic. Maybe you have the desire to try to invest in gold in the long run. If yes hence this question might important. What is the possibility that can happen to the price of gold later after the pandemic ends?
If we look at the gold price chart during the pandemic, it can be concluded that gold is still a lot of investors consider it a safe haven. The price of gold has risen and reached a peak of 1764 but has rebounded, although that cannot be said of a reversal of the trend.
The price of gold when the pandemic was still very fluctuating in line with global conditions, the decline in gold prices could be triggered by increased demand for the USD so that the price of gold still had time to go down, but finally rising up again until now the price of gold was in the range of 1729.92/Troy Onz.
However, some analysts worry that this rising gold trend as hedge funds playing price to take advantage of pandemic conditions to take profits in the short term, who buy and sell for the short term.
Update 10 July 2020 price gold history new high in spot forex is 1817 at 08 July 2020.
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Factors causing the rise and fall of gold prices
Since thousands of years ago, gold is a precious metal that is very valuable, gold can describe one’s prosperity. By having lots of gold, it means he is a rich man. In the past and present, gold is one of the precious metals which is an attractive investment.
But the true price of gold goes up and down, and it does not always rise, sometimes it goes down, here are some factors that can affect the price of gold.
Global crisis
The global crisis can affect the price of gold. You can watch recently the coronavirus which caused the world economy to collapse. At the time of the global crisis, many people less trust in the government or the state of the global market, which is often referred to as the commodity crisis.
In times of crisis, it is likely that many people will look for assets that are considered safer and provide hedges, one of which is gold, so this can cause gold prices to rise.
Inflation
Inflation and currency devaluation become Another factor that affects the price of gold. Investors will think of buying gold if the value of flat money falls. The high inflation rate will make the prices of goods to rise. Uncontrolled inflation will make the price of gold rise up.
If inflation is high, people are reluctant to save flat money, for example, dollar investments but they will buy gold whose prices tend to be stable and safer from inflation.
US Dollar Value
Gold price movements are still often associated with the value of the USD. This is because the USD is still the dominant reserve currency in the world and makes the US dollar the main currency in international trade. If you pay attention to price history when the dollar strengthens, gold tends to weaken, and vice versa.
Reserve of the Central Bank
Central banks around the world hold flat money and gold as reserves. The World Gold Council has stated that central banks are starting to buy more gold than they sell.
As central banks diversify their monetary reserves, by switching to gold, the price of gold can rise. Some countries that have foreign exchange reserves. The majority of which consists of gold, such as the United States, Germany, Italy, France, Portugal, Greece, and other European regions. And also China became the biggest gold hunter as their foreign exchange reserves soared.
Interest rate
Although Gold has no relationship with bank interest, such as bonds or savings accounts. However, the increase in gold prices was one reason the central bank cut interest rates. And, if interest rates increase, the price of gold might decrease.
This is due to high-interest rates causing investors to choose to save their money on deposits, rather than on gold. Conversely, when interest rates fall or low it tends to make the price of gold go up because of demand increases.
World Political Situation
The tense political situation and the results of war. Especially those involving the US and Western countries can also be a reason for rising gold prices. Political and social vulnerability makes people avoid risky investments like the stock market and choose gold.
This is evidenced in the increase in gold prices in late 2002 and early 2003 because at that time world politics was hot as an allied attack on Iraq. So investors moved away from the money and stock markets and chose precious metals so that the demand for gold rose sharply.
Jewelry and Industry sector
If you go to a gold shop, you can see if gold is made of various kinds of beautiful jewelry. Necklaces, rings, earrings, and so on. Not only as an investment asset, but more than half of the demand for gold is also to be designed as jewelry.
Many of these requests came from China, the United States, India, and several other countries. In India, gold is still a currency, wealth, and an important gift.
There are also some industrial sectors that use gold to make devices, electronics, computers, medical devices, and others. About 12% of demand in the industrial sector for gold purchasing.
Gold Production factor
Gold is said to have a limited amount on earth. Annual gold production is around 2500 metric tons, while the supply of gold needs around the world around 165,000 metric tons.
So, it will affect the gold supply. In addition, the cost of production can affect the price of gold in the world. The deeper mining causes its own difficulties and the higher costs, this can affect the selling price of gold.
Supply vs Demand
It is common knowledge in economic theory if demand rises prices will rise, but if supply increases while demand is constant prices may fall. This also applies to gold, if the demand for gold increases, whether it is due to panic because of an uncertain global situation, or other things, prices will slowly rise. But there can be an increase in gold demand due to large lenders coming in to take short-term profit-taking.
Another fundamental news.
Important news in high impact news released in the economic calendar can also affect the rise and fall of gold prices. For example NFP or Non-Farm Payroll, PPI or Producer Price index, FOMC, or Federal Open Markets Committee, GDP. The news can be a factor in changes in the price of gold because gold is correlated with the USD.
The price of gold during a pandemic
Coronavirus outbreak was first discovered in Wuhan China at the end of 2019. An outbreak that later spread to almost all countries has made the global economy experienced a sharp decline.
The stock sector has fallen sharply, but in contrast to the price of gold, the price of gold has risen 21 percent since the beginning of the year to April. The surge made the precious metal one of the safe-haven assets amid the COVID-19 pandemic.
When comparing with commodity prices, the value of gold prices has a better strength to become a safe haven. Although the price of gold every day does not always go up. This is because there are many factors that can cause prices to fall, but in general gold prices tend to be in a bullish trend.
The current gold price is at 1737.16, although it has not reached its highest point as in the history of the previous chart in 1,920, some analysts expect the price of gold to reach 3000 $. Whether it is true or not, but the trend movement curve and if the pandemic does not end soon, it is still possible for gold prices to rise even higher.
One of the reasons people choose gold investment is because it is easily liquidated. If you want to get the cash money we can sell gold easily in the shop where he bought gold.
Gold price prediction after a pandemic
Based on an analysis by the Swiss global investment bank, UBS. World gold prices are projected to potentially push the highest level this year after declining in March. Along with the correction experienced by a number of other investment assets globally including the stock market.
This was revealed by Joni Teves, Precious Metals Strategist at UBS Investment Bank, in the “Squawk Box Asia” program via CNBC.
Note: 1 troy ounce is equivalent to 31.1 grams.
This prediction is supported by positive sentiment from the tendency of investors to look at safe-haven assets as an instrument of safe investment amid global uncertainties and the real sector which is also still negative.
Furthermore, Teves said global gold price movements have been driven by “increased investor interest, especially from institutional investors.
World council gold report
The World Gold Council has released a report on the trend of gold demand for the first quarter of 2020. The report states the global coronavirus outbreak is the biggest factor affecting world gold demand. This is due to the scale of the pandemic as well as the potential for economic impacts to emerge. So investors looking for safe-haven assets.
Gold ETFs [exchange traded funds with gold base assets] also appear to have the highest quarterly inflows over the past 4 years amid global uncertainty and financial market volatility.
David Lennox analyst Fat Prophets
Meanwhile, David Lennox, an analyst at Fat Prophets, reported to CNBC via e-mail. The biggest supported reason for the strengthening of world gold prices was the steps taken by governments and central banks in a number of countries in preventing the coronavirus pandemic.
Large funds poured by the government to stimulate the “sluggish economy”. Due to Covid-19 actually raises concerns over the position of debt in the future when the virus later passes.
Gold is a non-yielding asset. When low-interest rates in the US create opportunity costs. Or costs incurred because choosing gold investment is lower, compared to other investments, such as US bonds. That way, when interest rates in the US lower down, the price of gold tends to strengthen.
While analysts from WingCapital Investment predict that the price of gold will even reach US $ 3,000 / troy ounce. At that time, that level looked unusually high for gold. To note, the highest record price of gold is US $ 1,920/troy ounce which was achieved on 6 September 2011, almost a decade ago.
Bank of America (BofA) also predicts gold will be at US $ 3,000/troy ounce in the next 18 months.
What must be considered for gold investment?
Before investing in gold there are a few things you need to pay attention to because even though gold is an investment asset. There are also some that only make it as jewelry. So you must determine the purpose, investment, or jewelry.
The following are some things that need to be interpreted in gold investment.
- Frequently Update the Latest Gold Prices, if you are a short-term gold investor, you should always keep up with price changes, so you can buy at low prices and sell at high prices.
- Choose Gold Investment Products Carefully, for investment, choose gold bars instead of jewelry. Because gold jewelry selling prices can decline too much.
- Compare the prices of gold in some official stores and choose the cheapest. But usually, the price of gold bars follows the international gold standard.
- Buy Certified Gold, is very important because if you are going to sell without a certificate it will be rejected, buy gold in an official store.
- Make sure the gold you buy is genuine. Real gold will not change color. In physical gold, especially gold bars also usually have a stamp to determine the level of gold or carat.
- Choose a trusted online gold saving, if you want digital gold investment, make sure the site is trusted.
- Store your gold in a safe place, you should have a special place to store gold with multiple security keys.
Gold price forecast 2020
The 2020 gold price forecast still has the potential to be a safe haven amid industrial uncertainty. The condition of geopolitical uncertainty and low-interest rates, it is still possible to push the value of gold even higher.
Gold prices today are still fluctuating, with a new high printing at 1817 prices on 8 July 2020. Overall, the major Gold trend is bullish, seen monthly time frames tend to form bulls candlesticks.
Citing Gold.org that the demand for gold by the central bank is still likely to increase, and also a good history of gold prices has occurred since 12-24 months where prices were raised significantly.
The structural development of China and India is also in the spotlight for gold analysis going forward. Although still not yet touch highest gold price, but possible will reach 1900 in 2020.
Final thought
Some gold analysts still estimate that the possibility of gold prices reaching $ 3,000 may become key after the pandemic ends. But if the price is reached, it might still take a few more years.
It is estimated that the post-pandemic, to back to a new normal and form a resilient economy will require a long time. Traffic systems between countries will change the rules if COVID-19 does not disappear from the earth. As WHO revealed if might virus will never end, hence wherever people go from one country to another, they must pass rules related to their health.
Likewise, the printing of new fiat money issued by the Fed that provides greater stimulus than the 2008 crisis. This is vulnerable to cause inflation, then gold is an asset that can be very valuable in the future.
If you buy gold per gram and need to calculate then use Gold price per gram calculator.
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