(Bloomberg) – It’s easy to forget now, but there was a time early in the pandemic when the price of gold was in freefall.
The pandemic of 2020 soon proved to be the driving force behind one of the fiercest demonstrations the gold market has ever seen.
On Friday, at the close of trading in New York, the bar rose sharply to $1,902 per ounce, 30% higher than the March low. It was one step away from the all-time record for 2011.
The price of gold is trading at historical highs
Coronavirus Drives Price of Gold
The coronavirus has unleashed a torrent of forces, which are conspiring to feed the incessant demand for the perceived safety of the turmoil that gold provides.
There are fears of further government-ordered blockades. And the decision by politicians to push through unprecedented stimulus packages. And the decision by central bankers to print money faster than ever to finance that spending.
There is also the drop in inflation-adjusted bond yields in negative territory in the US. Add to that the sudden fall of the dollar against the euro and the yen; and growing tensions between the US and China.
All these things, together, have caused concern in some financial circles about stagflation.
The main driver of gold’s latest recovery „has been real rates that continue to plummet and show no signs of easing in the short term. Edward Moya, senior market analyst at Oanda Corp.
Gold is also attracting investors „worried that stagflation will win and probably warrant even more accommodations from the Federal Reserve.