Gold Holds Close to Record Highs as Markets Focus on Economic Fallout of Pandemic
Arslan Butt • 1 min read
Gold prices are trading mostly unchanged, holding on to record high levels as markets worry about the extent of the impact from the ongoing coronavirus pandemic on the global economy, as the number of cases and death toll continue to rise, delaying recovery. At the time of writing, GOLD is trading at a little above $1,975.
Analysts anticipate that economic recovery will take longer than previously forecast and that across the world, countries are likely to experience severe and unprecedented downturns in the wake of the current crisis. In addition, economic recovery once the pandemic is brought under control is likely to require further stimulus efforts from both governments and central banks. The increased need for stimulus continues to support the safe haven appeal of gold, helping it climb to record highs.
Most central banks around the world have cut interest rates lower and are expected to hold them at low levels for a longer period of time. While these moves will serve to protect their economies from severe damage in the wake of the pandemic, it indicates that economic conditions are unlikely to pick up and improve to pre-pandemic levels anytime soon.
Gold prices have also been boosted as a result of a weakness in the US dollar amid worries that the US economy is unlikely to rebound anytime soon. Although recent economic data releases point to signs of improvement, especially in key sectors like manufacturing, the number of coronavirus infections continue to rise in some states and could drive further lockdowns, further delaying possible recovery.