The COVID-19 Coronavirus and Its Impact on Gold Prices in 2020 Discussed by Daniel Fisher of Physical Gold

London-based Physical Gold Limited is an online dealer in gold and silver bars and coins.

Daniel Fisher is the Managing Director of the business and is renowned as an expert on the precious metal's markets. This press release is a follow-up to Daniel's recent insight article - "Gold prices surge to 7-year highs due to coronavirus pandemic fears". We met with Daniel and discussed the relationship between gold prices and the coronavirus outbreak.

Since 31st December 2019 when China first reported a suspected new strain of flu in the city of Wuhan, Hubei province to the World Health Organisation the world has become aware of the COVID-19 coronavirus. The timeline shows that new outbreaks across the world are being reported daily, with 84K cases and 2,859 deaths having occurred at the time of writing.

On 26th February, the World Health Organisation warned the world to prepare for a pandemic, with two of their three measures for a pandemic having been reached.

The impact on gold prices since the outbreak started

Gold prices have risen sharply in the 60 days since the COVID-19 coronavirus outbreak started. The period has seen a 7.6% increase in gold prices, with gold reaching a 7-year high on 24th February. The main reason Analysts attribute the recent gold price rise is the COVID-19 outbreak.

To summarise recent gold prices per troy ounce are:

31st December – Outbreak starts - $1518

7th January – Fears about coronavirus grow - $1575

24th February – Gold reaches new 7-year high - $1660

28th February – Gold price today - $1633

Why does the outbreak cause an increase in prices?
To outsiders there wouldn't seem a natural connection between the coronavirus and a sharp increase in gold prices, so we asked Daniel, "Why has the COVID-19 coronavirus outbreak caused such a sharp increase in gold prices?" Daniel replied "There are numerous factors, but in a nutshell, it's all about confidence and risk management. The precious metals market is responding to increased buying due to asset switching. Investors are moving to gold as a safe haven investment and switching from other asset classes such as stocks and shares, which are deemed riskier at this time. Some shares such as EasyJet and Disney, which are heavily tourism-related are particularly struggling on price due to the outbreak."

The future outlook for gold prices during 2020

So, what about the future outlook for gold prices? Daniel commented, "How do you see gold prices performing throughout the rest of 2020?" Daniel replied: "Nobody truly knows the answer to this of course, but the outlook for future gold prices looks extremely promising. There are numerous factors, which are causing uncertainty, there's the coronavirus outbreak, Brexit, global terrorism and the US elections, which are all impacting prices. Recently numerous Analysts have been predicting that gold prices will exceed $1800 per oz in Q2 if the coronavirus continues and becomes a pandemic. I agree with this and think now is a great time to invest in gold and other precious metals such as silver".

Gold is often seen as a safe haven investment, we asked Daniel, "Why is gold seen as a safe haven investment and why does the COVID-19 coronavirus outbreak cause investors to seek a safe haven?" Daniel replied: "At times of economic uncertainty, investors switch their asset classes. We are already witnessing a switch from assets such as stocks and shares into precious metals. This is because investors know that gold (and precious metals) hold their prices in times of economic adversity – this is proven over millennia. When the economy looks bleak investors seek safe havens. Economists are already predicting a slowdown of the world economy this year directly due to the coronavirus outbreak. Gold has and always will be seen as a safe haven."

About Physical Gold Limited

Physical Gold Limited is a long-term established gold and silver dealer operating online only and based in London, UK. Founded in 2008 by Daniel Fisher the business has a strong reputation for providing quality advice about the precious metals market as well as supplying top-quality gold and silver investments to its clientele.

How to Contact Physical Gold Limited

Company website: https://www.physicalgold.com
Registered Office: 25 Old Broad St, London EC2N 1HN
Telephone: UK +44 (0)020 7060 9992
Contact: Daniel Fisher, Managing Director
Organisation: Physical Gold Ltd


Image Credits: Gerd Altmann and Gerd Altmann