Is Gold Still A Safe-Haven Asset During The Coronavirus?

In times of crises, investors and traders have tended to look toward the commodities markets as a safe-haven. Precious metals and crucial energies — these materials have always been sought after because of their universal usability and near-constant demand. But what about now? Do these guys pose a sound investment during this current pandemic? Let’s look, before giving you our regular weekly overview of the top market events.

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Gold

Yep, this classic safe-haven metal is living up to its hard-fought reputation. Anyone that planned ahead of the next global prices and invested in gold will be pretty smug right now, as prices have risen 9% while stocks have dropped 20% after the coronavirus outbreak.

Why so high? Well, the price of gold isn’t tied to production levels like some other metals, e.g. copper. Traditionally, gold is pretty good at weathering a storm and the latest crisis has drawn the gaze of many a hungry investor. Additionally, gold traditionally flies on passenger aircraft; there’s been a lot of disruption there, so there’s less of it flying to and from buyers and sellers. In demand and hard to get, gold is on the up!

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Gold spot, YTD

Source: Goldprice.org

Oil

Oil is having a bit of a tumultuous time of late. If you’ve ventured out of quarantine for an essential trip, you may have noticed a nice surprise at the pumps.

The issue all started back in March when Russia and Saudi Arabia, two of the world’s biggest producers, got into a little bit of a tug-of-war over who could produce the most oil. Rising supply and slashed demand (due to lockdowns) meant the price of crude tumbled.

Now, OPEC+ are having to step in to try and stop this dangerous downward spiral, which could see the industry implode along with thousands of jobs. A deal is currently being hammered out, but it needs to hurry up. West Texas Intermediate (WTI) crude slid more than 9% last Thursday, settling just below $23 a barrel, with investors worried that a deal to cut production may fail.

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WTI (YTD)

Source: Business Insider

Flour?!

Do not adjust your screen, that word above is F-L-O-U-R. There are few things in this world more powerful than free time and the will to save cash. With that spirit in mind and with the ongoing global pandemic, many home-officers have become home-bakers (between meetings, we’re sure). This has forced suppliers to unexpectedly ramp up production.

According to Nielsen, in the US sales of baking yeast were up 457% over last year for the week ending the 28 March. Flour was up 155%, baking powder up 178%, butter up 73% and eggs up 48%. That’s one giant pancake!

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Wheat, YTD

Source: Business Insider

Key Events This Week

We have a fairly quiet week ahead, here’s what’s coming up.

● Monday and Tuesday don’t really feature any high-volatility events. Rest easy. Hone your skills. Perfect your trading strategy.

● On Wednesday, we’ll get a flurry of activity from North America. First, we’ll hear the Retail Sales Control Group figures for March (USD). Then, up north, we’ll get a look at the Bank of Canada’s Interest Rate Decision (CAD).

● Thursday will bring a couple of important Australian employment-rate announcements (AUD); the EU’s Harmonised Index of Consumer Prices (YoY) (EUR); and finally, we’ll get a look at the US’ Initial Jobless Claims (USD).

● On Friday we’ll get China’s month-on-month and year-on-year GDP figures (CNY).

Are you loving our Monday article series almost as much as the other epic content on our blog? If you think this informative kind of writing is what your traders or investors are crying out for, contact us today!

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