Graph showing gold price increasing in 2019

Coronavirus and RBA cuts predict gold price increase

Covid-19 hasn’t had a huge impact on the price of gold. Historically, the price of the commodity is fuelled as much by demand and supply as any product on the market. If there’s an oversupply of mined gold, and an under-demand in the market, then the value is reduced.

When it comes to natural disasters, war and epidemics, these perhaps are more influential as gold can serve as a solid platform of currency and can ensure value where local economies may become degraded. With the prospect of this happening, and countries including Australia facing a recession, the gravity of the economic uncertainty for world nations is surely an enhancer for strengthening demand. Investor behaviour can be a key influence in gold prices according to investor.com, where they also state that historical recessions have seen gold prices improve, and can be used as a good and stable tool for portfolio diversification.

According to an article by cnbc.com on March 5th 2020, deductions present that money has been seen to flow out of riskier asset bases, as a response to economic pressure as a result of coronavirus and perhaps has been an influence to increased spot gold prices having gained a 2.2% increase recently.

Furthermore, Australia’s economic conditions have shown influence in the past for increasing gold prices, where rate cuts (as we’ve also seen recently amidst economic response to coronavirus) by the RBA has promoted gold prices (australianmining.com.au), which have bolstered. The RBA on March 3 reduced the cash rate by 25 basis points. The gold price currently stands at almost its highest point for 2020, refer to figure 1. as provided by goldprice.org.

Bullion sales and purchases are a very stable investment option, and when looked at from a global economic perspective, can help brokers understand the health of global trade, amidst fears of impending influencers such as natural disasters, war and epidemics like Covid-19. For more information, or to ask about bullion trading services, feel free to contact Brisbane Gold Brokers today.