May 8, 2020 10:00 UTC
May 8, 2020 at 10:00 UTC
Gold Demand Rises in Q1 of 2020 Amid COVID-19 Pandemic
With the widespread of COVID-19 pandemic the global economy has dropped down to nothing. The disruption of gold distribution in the very first quarter of 2020 while the demand projected a tremendous growth especially in the west. Moreover, most of the central banks accounted for large quantities of the precious metal.
With the sudden crisis of the COVID-19 pandemic in the start of the 2020, traditionally perceived as riskier assets such as cryptocurrencies and equities fall as investors were searching for liquidity in fears of the potential aftermath of the crisis.
Gold is considerably used as a safe-haven status with the suffering from price declinations in mid-March during the most emphatic days of uncertainty. The prices have recovered as it even traded at 12% in the green in the current year.
When the government initiated stimulus packages by the name of printing excessive amounts of debts and money in short periods, investors turned to the precious metal’s safe-haven feature. The demand for gold is rapidly increasing. Gold-backed ETFs attracted massive inflow which concludes in global holdings of Gold-based ETFs, reaching new milestones of 3,185t high. The interest for gold was increased by 36% to roughly 77t, particularly desired in the Western World.
The worldwide lockdowns disrupted the overall gold supply and production fell to a five year low of less than 800t. The very first quarter of 2020 allowed the central banks initiatives to amass the gold reserved by 145t. One exception came from the Central Bank of Russia. The largest country by landmass however made a decision to stop and sell it internationally.
The reports also suggest that the effects of the COVID-19 pandemic are easing. The general belief has passed the peak of infected people. The European Central Bank is yet to announce the increase to its pandemic emergency purchase program.