While the prices of certain commodities, such as oil, have been plunging since the outbreak of the coronavirus first began, others have enjoyed the volatility and uncertainty that comes with the outbreak. Traditional stores of wealth, such as precious metals like gold, have enjoyed decent gains over the past few weeks. Although the yellow metal ended up dipping a little initially on Wednesday, fresh remarks from the Federal Reserve ended up pushing prices back and ending the day on new gains.
Federal Reserve Chairman Jerome Powell ended up saying that the central bank would do whatever it can to prevent and mitigate the next economic downturn, which includes using quantitative easing as a potential tool. Speaking in a testimony before the Senate Banking Committee, Powell went on to say that the institution would use quantitative easing in a proactive manner to help navigate a possible recession. Although he didn’t mention when exactly he expects a downturn to occur, many experts are worried that 2020 and 2021 could be when it begins.
While Powell’s comments helped lift gold prices back up a little, they were initially falling on Wednesday on the possibility that the coronavirus, know referred to as COVID-19 by the World Health Organization, might be slowing down. Although this isn’t a bad thing, gold prices are inversely correlated with global fear in the markets, and the ongoing coronavirus epidemic has helped push prices of the yellow metal up further then they might otherwise be. Since then, China has reported a sudden increase in the number of confirmed patients.
“The virus is having a noticeable impact on physical gold demand. There, as well as in Hong Kong, many jewelers are shut because gold buyers are staying at home to avoid infection and are reducing their spending to the bare essentials,” said Daniel Briesemann, an analyst at Commerzbank in a note to clients about Chinese gold demand. However, other analysts think that prices for the precious metal will continue to rise, as other geopolitical issues take the central stage once more. In the future, “with more political headlines, Middle East worries, Eurozone economic problems [and] Brexit, investors may be bargain hunting in gold soon if we see some lower prices,” added George Gero, managing director at RBC Wealth Management.
Gold prices ended the day up just 0.43%, or $6.8 per ounce, settling at a reasonable $1,574.20 per ounce. The precious metal is currently trading at well over a 7-year high, reaching a price level not seen since 2013. The general consensus seems to be the prices should continue to rise over the next year or two. Other precious metals, such as palladium, have seen trading at prices even higher than gold for a while now as well.
As for the coronavirus, the number of cases seems to have been slowing down according to the data, but a substantial spike was confirmed later today. The total case number has reached 60,347, with approximately 500 of them outside mainland China. There have been 1,369 confirmed deaths, with 6,074 patients that had the disease having recovered from the condition. The total infection count in the U.S. is only at 14.