Why Gold Price is Increasing during Pandemic?
People all around the world are facing a hard time during the pandemic in various aspects of life. Of course, many people are financially affected by the situation. Nevertheless, it does not mean that they lose hope. They need to plan everything much more carefully, including their investment plan. People change their mind about the type of investment they want to invest in. You might have a question about why the gold price is increasing even when the world is still in a pandemic situation. Here are the answers.
Why the gold price is increasing?
1. Safe Haven
Because the world is still in uncertain times, people are looking for a safer option of investment. There is no doubt that many people agree that gold is a kind of investment with relatively low risk compared to other investment options. During a crisis just like in this pandemic era, it seems that the demand for gold is increasing. Because the demand spikes, the price gets higher as well.
2. Relatively Stable
Some people love a kind of investment that is more speculative. If they can read the market opportunity carefully, they can earn a lot of money from this kind of investment. However, during the pandemic, people usually will restrain from being speculative since everything is unpredictable. It is better to play safe and look for something relatively stable over the long haul. Gold investment is the perfect answer for this need. If you are asking why the gold price is increasing, it might be associated with the fact that gold is not greatly affected by inflation or generalized uncertainty.
3. Weakened Value of US Dollar
The pandemic situation impact can be seen, including in the dollar value. The value of the dollar has depreciated. This situation makes investors from outside the US attracted to gold investment. Compared to other currencies, people find that gold is cheaper. Since gold is considered cheaper, many people want to invest in gold much more. You can expect what will happen to the gold price when more people want to buy it. The price is rising, for sure.
4. Lack of Yield
The world is full of uncertainty because of the pandemic. There is no doubt that the financial markets will get affected the most. Every country tries its best to keep the financial markets stable. The interest rates have been kept near zero by the Federal Reserve since March for keeping the stability of the financial markets. At the same time, the cost of borrowing is kept as low as possible as well. The yields are brought down. Gold lacks yield. That is why investors are more interested in this investment more.
5. Media Coverage
Because of the increasing price of gold, it seems that more people are talking about this topic. Since many investors and analysts are interested to discuss more, more media reports can be found. As a result, the price rises even higher.
Why Price of Gold is Increasing?
Because of the uncertainty, some people might think that the gold price will be lower. You cannot help but ask about why the gold price is increasing because the fact is completely different from your expectation.