It’s time we all agree that 2020 was an incredibly hard year. Yes, we say that about every year but 2020 was truly bad. We’ve witnessed a pandemic, international travel bans, lockdowns, and stock market crash all in one year!
It’s safe to say that Covid-19 took a historic toll on the local and global economy. Thankfully now that 2020 is over, let’s take a look at the one thing that remained floating.
Yes, you guessed it! It’s GOLD.
So how well has gold performed during the Covid-19 crisis you ask? We’ll be answering all your questions in this article.
According to the World Gold Council, Financial experts have been on a buying spree for gold adding a record of 734 tonnes worth $39.5 billion to their stockpiles in the first 6 months of 2020!
So as the world’s smartest experts look for safe havens to store their money in fears of an economic crash, it comes as no surprise that demand for gold has been increasing.
Some people would even be shocked to know that gold prices have surged 53% in the midst of the Coronavirus pandemic, exceeding 2011’s record high of $1,920.30 an ounce(oz) to an all-time peak of $1,943. Yes! That’s right!
However, Is that the only reason people are rushing to buy gold?
The answer is No! And that brings us to...
Gold Vs. The U.S. Dollar
Now from the title, you’re probably wondering what does the U.S dollar has to do with the increasing prices of gold?
Well, the U.S. dollar is simply the benchmark pricing mechanism for gold. Therefore, the price of gold and the value of the currency of the United States are interconnected.
So when the U.S. dollar was getting clobbered against global currencies due to the virus spread in the U.S, gold prices have been rising.
When the value of the U.S. dollar moves lower, gold tends to become more expensive as it becomes cheaper in other currencies. In other words, the U.S dollar has been only weakening and Analysts say it’s likely to stay that way in 2021.
Now you’re probably wondering if gold prices will remain bullish in 2021 too?
Let’s take a look!
In January 2020, the average price for an ounce(oz) of gold was 1,560.67 U.S. dollars. As of December 31, gold prices left 2020 at $1893.66 an ounce(oz), closing the year solidly high.
This means a buyer who bought an ounce(oz) of Gold at the beginning of 2020 made a profit of over $300 in just a year; making 2020 “the year of the gold rush” there is no question about that!
Analysts forecast a rise in prices by another 25% amid the Covid-19 vaccine hopes in 2021. Thus, gold prices are expected to extend their bullishness to test a fresh all-time high level of $2400-2500.
So now we can only hope for a Covid-19 vaccine and a rise in gold prices!
It’s good to know that even when there is rising inflation or a financial crisis, gold will always be a safe haven resource to resort to. We encourage searching for affordable prices before buying (hint: check out Minted)
We hope everyone stays safe and please take care of your mental health!