Analysts still see COVID-19 uncertainty ruling the day and benefitting gold prices, as metal prices rose almost 6 percent in the week leading up to April 9 with more gains anticipated.
There is still a lot of uncertainty around the economic fall-out from the coronavirus, despite rallying equities, and this has attracted more investors to the gold market.
“There is a danger here that we follow more of a W-shaped recovery in stocks rather than the V-shaped one. We are certainly not out of the woods in terms of the pandemic. We are still going to get some negative data,” Bart Melek, head of global strategy at T.D Securities told Kitco News, a news agency that covers the latest gold and silver news.
Worldwide coronavirus cases are more than 2.1 million with at least 146,000 deaths. The U.S. has the most cases recorded with at least 32,000 deaths. Data from Europe continues to show that new cases are being recorded daily.
“We are a long way off from the peak in many countries in terms of the virus,” said Kieran Clancy, assistant commodities economist at Capital Economics. “The uncertainty will continue to benefit gold.”
According to projections from JPMorgan and CitiGroup, markets will see at least a $5 trillion hit to the global economy in the next two years as a result of coronavirus-related shutdowns.
Many analysts are expecting the gold price to keep rising in the remaining quarters of 2020. The price per ounce of gold on April 17 was around $1,705.
Blue Line Futures chief marketing strategist Philip Steible forecast that gold prices would average $1,750 in Q2, and $1,850 in Q3. By the fourth quarter, Steible is expecting gold prices to average around $2,000.
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“The market expected a shortage of gold bars in New York due to the suspension of some gold refineries and logistical disruptions. However, the situation was expected to normalize following the partial restart of refineries. Clearly, investors are still concerned about supply logistics,” ING commodity strategists wrote on April 9.
Markets will get a chance to look at the inflation data from March on April 17 as the U.S. consumer price index is expected to be released.
