GOLD was back on the front foot after initially being dragged into the panic that swamped all asset classes during the first weeks of COVID-19 related lockdowns – a global phenomenon that is threatening to plunge the world economy into recession.
According to a report by Bloomberg News, efforts by central banks to stimulate their economies, the US Federal Reserve in particular, has sent investors in search of safe haven investments – a position gold has occupied for decades.
“What’s happening here is that the Fed is expanding its balance sheet and every other central bank in the world is doing the same,” Hans Goetti, founder and CEO of HG Research said in an interview with Bloomberg TV.
“What you’re looking at is massive currency debasement in the long term. That’s the major reason why gold is higher, and I would think that over the next few weeks or months, we’re probably going to retest the high that we saw in 2011,” he said.
“Risk sentiment is turning toward the cautious side, and investors are fleeing into the perceived safe-haven in view of the virus situation and massive money-printing activities,” Margaret Yang, an analyst at CMC Markets Singapore Pte, said in a note cited by Bloomberg News.
Futures climbed as much as 1.3% to $1,785 an ounce on the Comex, the highest since October 2012, and traded at $1,768.70 at 7:27 am in London, said the newswire. Spot gold was almost $60 cheaper at $1,712.63 an ounce, with the huge spread a feature of trading in recent weeks amid physical market disruptions.
Gold is currently at $1,712,68/oz.
Gold-backed exchange traded funds (ETFs) surged $23bn in the first quarter – the highest quarterly increase in absolute dollar terms – and taking total inflows in the past year to some 659 tons, said the World Gold Council on April 8.
This is the highest 12-month accumulation on a rolling annual basis since the financial crisis, with assets under management growing 57% over the same period, the council said. First quarter tonnage inflow totalled 298 tons.
Holdings were at new all-time highs of 3,185 tons in March, a net inflow of $8.1bn for the quarter, the council said.
