Sharp rise in gold and silver prices as Covid crisis continues

The enormity of the long-term impact of Covid 19 on the global economy has finally began to be reflected in precious metal markets, writes Betts Group managing director, Charlie Betts.  

In the past two months, we have seen sharp rises in the gold and particularly the silver price as investors seek safe havens from the likely impact of aggressive monetary policy and huge budget deficits being operated the world over.  

Experts forecast strong performance 

The progress of the gold price so far in 2020 has been relentless. There was a sharp fall following the initiation of global lockdowns in March 2020 and a sharp rise following the explosion in Beirut at the start of August 2020, but the price quickly normalised after both of these events, reverting to a steady but distinct upward trend. 

Gold reached a high of $2061/oz in early August 2020, which was a nominal all-time high in both dollar and pound terms, but remained several hundred dollars per ounce below that mark in real (i.e. inflation-adjusted) terms. 

Gold corrected sharply at that point, falling to $1931/oz before recovering again to around $1960/oz at the time of writing. 

Despite global gold demand being 11% lower than H1 2019, due to reduced consumer demand especially felt in the jewellery sector, the price is well supported by continued central government buying and strong ETF inflows from the investment sector, seeing ETF holdings at an all-time high. 

Gold can always be relied upon to perform well in a crisis and with the daunting scale of the world’s current predicament it is not only the traditional gold bulls forecasting strong performance for the yellow metal. Goldman Sachs recently reiterated its March 2020 forecast of $2,300/oz within twelve months, whilst Bank of America issued an 18-month forecast of $3,000/oz at the start of August 2020. 

If seen as a currency that cannot be printed against a global backdrop of overheating printing presses, these forecasts for gold look eminently reasonable. If consumers begin to lose confidence in fiat currency itself, these forecasts may quickly begin to look decidedly undercooked. 

This article is an excerpt taken from the September 2020 edition of Materials Recycling World, the market-leading business title for the recycling and waste management industry.To read the article in full, including an expert analysis of silver, platinum and palladium market performance please visit:

mrw.co.uk/analysis-and-markets/material-focus-precious-metals-10-30-08-2020/