CAPE TOWN- Market experts say the onset of the global Covid-19 pandemic has made gold’s relevance as a hedge even more apparent as the precious metal hit $2,000 an ounce for the first time, an increase of over 30 percent.
World Gold Council
, investors stashed a net $7.4billion of cash into gold-backed Exchange Traded Funds (ETF) last month. Investor demand has increased the intrinsic value of gold as many see the metal as a safe asset.
The latest surge in the commodity could be seen as a refuge during economic uncertainty as the Covid-19 outbreak has weakened the economy and clouded the global financial outlook.
that the pandemic has made gold one of the world’s best-performing mainstream assets and accelerated its price performance.
“Gold increased by 17 percent during the first half of 2020, moving up by an additional 10 percent in July. The most recent price move has come fast which, combined with markedly weak consumer demand, may result in higher gold price volatility in the near term. However, we believe the Covid-19 pandemic may bring structural shifts to asset allocation and that there are strong fundamental reasons supporting gold investment longer-term,” said the organisation.
The increased interest in buying gold, according to the World Gold Council has been driven by a combination of high uncertainty in the economy, low-interest rates, and a positive price momentum.
Silver has also seen an increase in price and demand since the start of the pandemic as the value shot up by more than 30 percent year to date.
he expects silver to outperform gold.
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