Precious metals once again become the object of desire for investors. Just a couple of days the price of gold rose more than 10%, while silver added in price by about 20%.
although earlier in March, the price of precious metals have tumbled, the current growth is the increased interest, primarily because of their scale.
“Increase of the precious metals that we have seen since yesterday, does not mean the aggravation of the crisis. On the contrary, the purchase of gold indicates a certain reduction of tension”, — the analyst of ALOR BROKER Alex Antonov.
“the Recent collapse in the price of precious metals was caused solely by the liquidity crisis was that large investors had to sell not only stocks and bonds but contracts for gold. Thanks to the recent measures of the U.S. Federal reserve pumping the economy with liquidity, the need for money became not so sharp, so investors started to buy gold, which is the best protection against inflation. And the inflation we will see in the US and the EU – emission of the infusion can not pass unnoticed”, — said Antonov.
About the future of the gold price can only be judged after the pandemic coronavirus will decline and it will become clear how much damage the world economy it caused. This is due to the fact that a large part of the mined gold used in the jewellery industry, and the serious recession of the world economy will cause the inevitable decline in demand for gold jewelry.
it is also Worth noting that the unprecedented rise in the value of gold and other precious metals in recent days, hides a very interesting and other points.
the Chaos in the market has created many market participants have serious problems. They were forced to close positions in individual instruments, to shift to other and so on.
in part, this has resulted in the gold futures is very far from the spot prices, said a senior partner at FP Wealth Solutions Igor Stremouhov.
“on Tuesday morning divergence, which on Monday was barely noticeable, became a scary, gold futures went up sharply and was trading far above spot prices. In this situation, especially comfortable feel buyers of physical gold, since in such conditions it is possible to buy the metal at a lower price than it can be done using ETFs or futures,” he says.
Indeed, the difference between the futures price per ounce and the spot was the highest over the last four years.
the role played by the failure of the supply of physical gold, said Stremouhov. Realizing that the market is a deficit of the metal, traders start buying paper contracts, putting them at a higher price.
although in the current situation, the future dynamics it is difficult to predict, it is likely that gold will continue to rise in price, said Nikita Ryabinin, head of the Luxembourg office of the consulting group “KRK Group”:
“on the one hand, in crisis conditions, the growing interest of investors to gold and other precious metals as it is considered one of the safe ways of investment. And in the near future this trend will not change, as it is not clear when the situation will be resolved with the coronavirus. On the other hand, recently it was possible to observe and sale of gold from large investors. Such behavior was partly driven by the desire to quickly realize the assets in order to repay credit debt. In General, the overall long-term trend in the precious metal market is difficult to predict, but most likely, the price of gold will grow steadily until the panic.”