The price of gold today hit $1,789.69 per ounce this morning – gold's highest value since late 2011 - as markets and economies alike continue to struggle to function in lockdown.
This, combined with the continued global increase of Covid-19 cases, has many concerned that lockdown will be prolonged in nations yet to beat the virus, or return to those who had previously thought themselves clear. This would continue to hinder consumer demand, as well as increase the reliability on state aid - neither of which benefits a free market economy.
Such is the concern over the international markets – particularly in the US – that gold imports from Switzerland to America totalled 127 tonnes; a record high for monthly gold imports. Standard Chartered reports that, based on Swiss trade data, 285.9 tonnes have gone from Switzerland to the USA in the past year, which is more than the total for the previous decade.
Price forecasts have been circulating with ever-more visibility in recent weeks, with UBS suggesting $1,800 per ounce by the end of 2020 – a figure that could be passed by the end of July at gold's current rate of demand. Goldman Sachs has amended its prediction for 2020 to a slightly higher value of $2,000 per ounce by the end of the year, up from $1,800 at the start of the year, with analysts warning that low interest rates and the risk of currency debasement (devaluation) are the key fear factors.
These sentiments are also shared by Standard Chartered, who told Kitco: “We expect gold to continue to draw investor interest given unprecedented global monetary easing and fiscal stimulus, low to negative interest rates, and gold’s strong correlation with real yields.”
One man in particular, President Donald Trump, is being highlighted as key factor in gold prices potentially rising further in 2020 and 2021. America is still in the grips of a trade war with China, as well as struggling to manage social unrest and the coronavirus. With the presidential election this autumn, it's inevitable that Trump will fight his corner, but politics is about compromise – something Mr Trump isn't a fan of. The resulting social unrest from future unpopular policy decisions could disrupt any coronavirus recovery, which will in turn weaken the Dollar. This would be bad for the US economy, but good for gold.