South Africa, a country whose economy was built on gold mining, has shut its mines for three weeks as part of a 21-day nationwide lockdown that the country hopes will help contain the spread of the coronavirus.
The number of confirmed cases reached 1,170 on March 27, with two deaths reported thus far.
The unprecedented lockdown is expected to negatively affect gold production in South Africa, the largest gold producer in Africa, according to Fin24.
Almost a month of inactivity is expected to dent gold production.
South Africa produces around 123.5 tonnes of gold per year. In 2018, Gold mine production worldwide was estimated to be approximately 3,260 tonnes, based on numbers reported by the U.S. Geological Survey.
“The industry as a whole is affected” by lockdowns at key facilities, according to Omar Liess, chairman of Gold Avenue — the online retail platform of Swiss gold refiner Mks Pamp Group.
Gold prices reached a seven-year high on commodity markets in early March as investors sought a safe haven from the COVID-19 pandemic and its destructive economic impact.
The public health crisis has seen the demand for gold coins and bars soar in the first few months of 2020. On March 9, safe-haven demand pushed gold prices above $1,700 an ounce.
Major gold dealers recently sold out of coins and gold bars amid panic buying as the U.S. economy took a nosedive and the government agreed on a record $2-trillion bailout to mitigate the effects of the coronavirus outbreak.
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Goldman Sachs analysts said they believe that the price of gold will reach $1,800 an ounce over the next 12 months.
Some analysts see it hitting the $2,000-an-ounce mark in the same time period.
