If you read our mid-week bulletin on Wednesday, you’ll already know that we have seen gold at around the $1600 mark this week – the precious metal surged on Tuesday to $1,604.30 after Apple warned that it was unlikely to hit its Q1 earnings target as a result of fallout from coronavirus. The tech giant said sales and production had both been affected, meaning it could fall short of expectations next month.
Fast forward to Thursday and the picture is rosier still for gold. Reuters reports that it reached a seven year high, peaking at $1,622.19 – a level we haven’t seen since February 2013. The new gains were again spurred by coronavirus, with more reports of patients testing positive outside of China including in South Korea and Japan and 36 new cases confirmed at a hospital in the capital, Beijing.
The Chinese government has announced a round of rate cuts in an effort to stimulate the economy but many organisations outside of the country continue to feel the impact of China’s stalling manufacturing and consumer spending.
The Reuters report explains, “A rally that had lifted major U.S. and European stock indexes to record highs this week lost steam, as investors fretted about the spread of the coronavirus outside of China. MSCI’s gauge of stocks across the globe shed 0.49% and emerging market stocks lost 0.76%.
“The pan-European STOXX 600 index lost 0.86%. Paris’ main index fell 0.8% as luxury stocks, which derive a chunk of their demand from Chinese customers, fell after the number of coronavirus cases outside China spiked. LVMH, Kering and spirits maker Pernod Ricard slid between 2.2% and 3.5%.”
The Dow Jones and Nasdaq also lost points.
In addition to the disruption and risk aversion being generated by the spread of coronavirus, gold was also helped to its seven year high by reports that Japan may well be in recession as poor economic reports continue to emerge. As a result, it is thought that many Japanese investors are swapping their local assets for US dollars and gold – which is helping the precious metal to continue its run.
With neither coronavirus nor the recession set to go anywhere anytime soon, now is a great time to have a portion of your portfolio in gold. Buy now to maintain a safe haven and capitalise as global economies face coronavirus fallout.