The FINANCIAL – Gold hit its highest price for the first time in more than seven years. Gold prices rose above the $1,700 per ounce level on Monday. After a 18% surge in 2019, gold prices have moved sharply higher this year amid coronavirus crisis and as central banks cut interest rates to try and stem the damage.
Gold retreated in volatile trading after turmoil in the oil market, the spread of the coronavirus, sinking equities, and expectations of easier monetary policy pushed prices up. The metal hit the highest since 2012, before paring gains, as Brent collapsed, futures on the S&P 500 Index sank, and the entire Treasury yield curve dipped below 1% for the first time. Investors have already driven holdings in bullion-backed exchange-traded funds to a record as the coronavirus hurt the outlook for growth, Bloomberg reported.
Spot gold rose 0.7% to $1,686.22 per ounce by 0325 GMT, having touched its highest since December 2012 at $1,702.56 earlier in the session. U.S. gold futures gained 0.9% to $1,687.80 per ounce. Gold prices rose above the $1,700 per ounce level on Monday for the first time in more than seven years, after a stock market rout due to concerns over a widening coronavirus outbreak and its economic impact drove investors towards safe-haven assets, Business World wrote.
“It is a massive flight to safety as the Chinese trade data was really bad, much worse than expected, Italy quarantined a quarter of their population (due to the coronavirus) and stock markets are down,” said Jeffrey Halley, a senior market analyst at OANDA. China’s exports contracted sharply in the first two months of the year while imports declined, data showed on Saturday, as the virus caused massive disruptions to business operations, global supply chains and economic activity. Global equities tumbled, while U.S. stock futures plunged 5% as investors sought refuge in safe havens to hedge the economic shock of the epidemic. “Gold is further supported by concerns that the slowdown of the global economy from the coronavirus would continue and central banks would keep rates low,” Phillip Futures analysts said in a note. Markets are expecting another rate cut from the U.S. Federal Reserve at its policy meeting on March 18, following last week’s emergency easing, CNBC wrote.
Indicating the risk-off sentiment, investors have already driven holdings in bullion-backed exchange-traded funds or ETFs to a record as the coronavirus hurt the outlook for growth. After a 18% surge in 2019, gold prices have moved sharply higher this year amid coronavirus crisis and as central banks cut interest rates to try and stem the damage. Goldman Sachs has predicted that prices could top $1,800 an ounce, Liveint.
In April 2019, at $1,273.86 an ounce, the metal’s price was at its lowest level since December 26, when the stock market began to recover from a sharp sell-off that left it on the precipice of bear market territory, The Financial Times reported.
Over the past year, shares of the Canadian-based gold miner Kinross Gold (NYSE:KGC) are up over 70%. All asset classes have their advantages and disadvantages. So far in 2020, gold is proving to be one of the best investment instruments. But gold prices can be volatile. There are different ways to participate in the volatility or increase in the price of gold. One way is to invest in gold mining companies like Kinross Gold. Many investors regard gold miners as a proxy for gold. And in recent months, many gold miners have indeed seen their share prices pop as the global gold price has surged. If gold remains at its current price or moves higher, miners, like KGC, will likely report better margins and rising free cash flow, potentially boosting their stock prices even further. On a final note, when a company owns a mine, it also owns all of the gold stored within it. Kinross Gold currently has mines and projects in the U.S., Brazil, Russia, Mauritania, Chile and Ghana, Yahoo Finance reported.
Egypt announced an international exploration tender for gold-mining. Read more here.