In this part, we use S&P Global Market Intelligence data and insight to look at how the metal price environment for the precious metals and uranium has evolved during the COVID-19 pandemic. While the gold price dropped mid-March along with those for most other commodities and markets, it has since come back strongly on the back of higher financial investment demand. Meanwhile, silver, despite record retail investment, has sunk to its lowest price in 11 years due to lower industrial demand. Looking at the platinum group metals, or PGM, lockdowns in South Africa and plummeting global auto sales have severely shocked prices. This disruption has kept an uneasy balance, however, and has not yet fundamentally changed the price trajectories of upward for palladium and rhodium, and downward for platinum.
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Markets fear just how much the COVID-19 outbreak could hurt the U.S. and Europe — the next two regions that will be hit the hardest by the virus. And as the Federal Reserve looks increasingly ready to cut rates down to zero all in one go next week, it might be a great opportunity to buy gold, according to analysts.
Gold was not able to escape the massive market sell-off this week, which accelerated on Thursday as U.S. stocks posted their worst day since 1987. Gold fell victim to margin-calls, as investors were forced to sell their gold positions to cover for losses elsewhere.
“We suspect that margin calls and losses in other markets are driving investors to search for cash, and gold happens to be the liquid position they are choosing to cash out on,” said RBC Capital Markets commodity strategist Christopher Louney.
Gold surged over 1% on Tuesday to fetch more than $1,600 an ounce as Apple Inc’s surprise warning about the impact of the coronavirus outbreak fueled concerns about global economic weakness, driving investors to lower-risk assets.
Palladium notched an all-time high, driven by short supplies of the auto-catalyst metal.
Spot gold was up 1.3% at $1,601.04 per ounce, its highest since Jan. 8. U.S. gold futures climbed 1.2% to $1,604.70 an ounce.
“The equity markets are under pressure and gold is still being viewed as a quintessential safe-haven asset as we do get some negative news in this case in regards to coronavirus and its effects on the global economy,” said David Meger, director of metals trading at High Ridge Futures.
By Ranjeetha Pakiam and Elena MaznevaBloomberg Dec. 31, 2019 3:46 PM
Gold climbed to a three-month high to clinch its best annual performance since 2010, as a weaker dollar helped cap a year marked by global economic jitters and trade frictions.
Bullion gained 19% this year as central banks globally embraced looser monetary policy to boost growth. Brexit, unrest in regions from Chile to Hong Kong and buying sprees from key central banks and exchange-traded funds have also helped support prices.
Spot gold climbed as much as 0.7% to $1,525.38 an ounce on Tuesday, the highest since Sept. 25. It traded at $1,520.13 at 1:40 p.m. in New York. Gold futures for February delivery rose 0.3% to settle at $1,523.10 on the Comex.
The metal managed to hold on to gains even after President Trump said he will sign the first phase of a trade deal with China on Jan. 15, easing uncertainty that has fueled haven demand for bullion.
“It is not really a surprise” especially after headlines yesterday that China’s Vice-Premier Liu He is coming to Washington to sign the so-called phase-one trade deal, said Tai Wong, the head of metals derivatives trading at BMO Capital Markets.
Some analysts doubt that gold’s strength will stick next year. JPMorgan Asset Management cautioned that bullion may not offer sound portfolio protection.
“There are very few certain environments in which gold does well, and it’s not necessarily the case that 2020 won’t be any of those,” Hannah Anderson, a global market strategist at JPMorgan, said in an interview with Bloomberg TV. “In the next downturn, I do believe that bonds still could be defensive assets.”
Like eager prospectors in a B western, many investors believe there’s gold in them hills — and that’s where they’re heading.
Gold
has often been a haven for investors, and there are plenty of reasons
to seek safety now. They include the trade war with China, weakness in
Europe, central bankers looking at subzero interest rates, turmoil in
the Middle East, the looming Brexit and uncertainty heading into the
2020 United States elections, and fears of a possible recession.
By mid-September, investors had poured nearly $8 billion this year into exchange-traded funds that hold gold.
This growing gold rush has pushed the price of the precious metal up nearly 27 percent since October 2017, to more than $1,500 an ounce. The last time gold was as expensive was April 2013, after it had declined from its August 2011 recession high of $1,917.90. Last month, analysts at Citigroup predicted that gold could hit $2,000 an ounce.
US gold futures dipped 0.3 per cent to $1,502.9 per ounce.
Reuters|Oct 03, 2019, 02.49 PM IST
Gold bars
Gold
prices were little changed on Thursday, following a jump of more than 1
per cent in the previous session, as investors awaited more data with
which to gauge US economic health and that could influence further US
Federal Reserve action on interest rates.
Spot gold was steady at $1,498.89 per ounce, as of 0758 GMT, while US gold futures dipped 0.3 per cent to $1,502.9 per ounce.
“After the sharp gains we are seeing some minor pullbacks on profit-booking, while sentiment in t ..
This article is part of the Journal’s quarterly markets review, “Investing in a Low-Yield World.”
Unlike
stocks and bonds, precious metals don’t give investors any income
simply for holding them. So why were they among the market’s best
performers in the third quarter?
The reason: In a world of falling—or outright negative—yields,
nervous investors seeking havens are less likely to miss out on returns
from bonds if they put money into gold or silver.
That eliminates the major trade-off that typically confronts those interested in owning gold: It offers no yield at all.
That
declining opportunity cost is why trillions of dollars of
negative-yielding debt around the world and sharp declines in Treasury
yields in the U.S. have sparked a rally in precious metals. The price of
silver rose 11% in the third quarter, while platinum rallied about 6%.
Gold advanced 4% in the quarter and is now up 15% for the year, headed
toward its biggest annual gain since 2010.
The sudden allure of precious metals highlights the turbulence of this year’s third quarter, in which stocks, bonds and other assets swung wildly as investors weighed the latest developments in the U.S.-China trade war. Stocks recovered from a turbulent August to creep back toward records in September, while bond yields, which move inversely to prices, stabilized after approaching record lows earlier in the month.
Buying physical gold or silver
as an investment is not always as straightforward as it sounds. Novice
investors often get lost in a variety of options: “Should I buy minted bars or sovereign coins?” “Maybe that limited edition coin would be a good investment?”
Sensible investors evaluate bullion options by the price and premium on the gold spot price. But the premium is only one part of the equation. It doesn’t necessarily mean that you’ll get that premium back upon the sale.
Worse, there are unscrupulous dealers out there. They will try to
trick you into buying numismatics and other collectibles that have a
huge premium and won’t retain their value over time.
As a result, it’s essential to get an understanding of precious metals before dipping your toes into this market.
In this article, I’ll answer some of the most important questions you should ask yourself before buying precious metals.
