A new report published this week confirms the purchase of physical gold including bullion bars and gold coins has increased by an astounding 378% compared to the 2019 weekly average due to fears that the U.S is about to slip into a recession.
With concerns over an escalating global trade war between the U.S. and China, the market has also experienced a 63% increase in financial professionals and bankers investing in gold over the past seven days.
New tariffs imposed on Mexico by President Trump last week have increased fears that a slowdown in global trade could potentially spark a global recession with enduring consequences. When combined with a falling dollar which is no longer seen as a ‘safe haven’, this has sparked investors to seek out much safer investment opportunities in an uncertain economic climate.
“The most likely argument is that the movements seen since the middle of last week have been related to deteriorating risk sentiment,” says Simon Derrick, Chief Currency Strategist with BNY Mellon.
“This is certainly consistent with the increased bid for not just the JPY, but also the CHF and gold since Wednesday, along with the USD’s rather more uninspiring performance over the same period.”
Many clients investing in physical gold have raised the funds to do so by liquidating exposure to equities and corporate bonds in reaction to unpredictable currency movements and market uncertainty with physical gold acting as a hedge against the uncertainty of both currency movements and market volatility.