Only three months into the new year and the coronavirus reported in December 2019 has reached pandemic status. This virus affects global public health and the economy. Gold prices have radically fluctuated on a day-to-day basis as the volatile market plunged with minimal recovery. The coronavirus gold prices, along with other precious metals, today have skyrocketed.
Why are the coronavirus gold prices so high?
Gold prices have once again leaped despite last week’s losses. This is in direct response to the coronavirus, gold mining operations, and how the Federal Reserve is handling the economic turmoil.
The Federal Reserve has announced they are committed to ‘unlimited asset purchases,’ which may have negative ramifications for the US Dollar. The US Dollar value has been decreasing, which means gold prices are increasing.
Gold prices are heading for the largest percentage surge in over a decade as consumers put their trust in precious metals. Mining facilities also temporarily suspend operation, which further chokes the supply of gold and other precious metal coins, bars, and rounds. Investors and collectors are currently buying up all they can to use as a hedge against a declining economy, and factors such as spot price and premiums are reacting to this massive increase in demand.
Goldman Sachs has referred to gold as a “currency of last resort,” and investors are running for it.
Which Mining Facilities have shut down?
Gold mining operations are shutting down temporarily to help prevent the spread of the virus. Among the minting facilities closing or briefly halting production, several announced brief closures. Some of these closures include Valcambi, Argor-Heraeus, and PAMP Suisse in Switzerland. They plan to be closed for only one week at this time. These companies also reportedly process around one-third of the total global annual supply of precious metal products. Once the world reopens, one could expect new production conquests to burst.
Because these facilities cannot even fully resupply due to transportation restrictions, their inventories may remain limited when their doors reopen. This might mean gold prices among other precious metals will remain high for some time to come.
What is going on with other stocks?
Sharing the increase alongside gold prices are silver, platinum, and palladium in addition to other stocks. May Silver on Comex is up about 5%, $1653 per ounce. Platinum rose to $627 an ounce, so prices span from around $590-$650. Also, palladium for June delivery added $16.70 to its base 1 oz price, now trading approximately between $1,480 and $1,615 an ounce.
Also, as Congress approaches a stimulus deal, the Dow Jones gained about 1800 points on March 24th. The S&P 500 also wins back its losses with about an 8% increase on the same day. This is all despite the US Dollar trading lower, which, according to the US Dollar Index fluctuated up and down on March 24 around .7%.
Despite these gains, crude oil prices remain shaky. China is a big consumer of oil, and because it has shuttered factories for the time being to fight the coronavirus, demand has dropped. Much of the global economy stems from China, so when something happens to their economy, it affects the world. On top of that, the fallout from the oil price war between Russia and Saudi Arabia continues. When Saudi Arabia announced discounts of 20% off a barrel, the stocks for oil fell more than 30%. The market expects oil prices to recover slowly, and estimate it will be $50 a barrel by the end of 2024. This is a significant shift from the current loss for the oil price shedding $20 per barrel.
Bullion Exchanges is your trusted precious metals retailer located in the heart of Midtown Manhattan’s Diamond District. Unfortunately, we temporarily closed our storefront and office until further notice from the impact of the coronavirus. This is effective at the end of the day on March 20th. Online orders might take between 15-30 days for shipping and handling. We are eager to return to work in April when we will continue to handle products with the highest level of care. Our inventory includes bars, coins, and rounds in a variety of gold, silver, platinum, and palladium products. Bullion Exchanges thanks you for your patience as we work through our high volume of orders and customers. We will resume in limited operation in April. Until then, we wish our customers good health for you, your families, and your communities.
Disclaimer. This article is not meant to serve as professional economic advice. Any action you take upon the information from this article and website is strictly at your own risk.