Pandemic Drives Gold Prices to Record Levels

The pandemic has also impacted gold mine supply, mainly due to temporary suspension of mining operations.

SEATTLE (Scrap Monster):  Refinitiv- the global provider of financial market data has announced its review of the gold sector.

According to the review, Covid-19 pandemic uncertainties have led to increased investor demand for gold in certain regions. At the same time, the tremendous rise in gold prices has made it dearer in local currencies. This in turn has resulted in reduced demand, leading to significant drop in consumption during Q2 this year.

The pandemic has also impacted gold mine supply, mainly due to temporary suspension of mining operations. Nearly 130 mines were either put on care and maintenance or operated at reduced capacity. The lockdowns impacted mined supply from mines, especially in the Latin American and African regions. The gold mine output has dropped by 12% to 762 tonnes.

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The gold prices touched an eight-year high of $1,772 per Oz at the end of June this year. The prices surged higher by more than 31% from the previous year. The gold-backed ETF posted 361% year-on-year growth. Contrary to significant uptick in demand for investment gold, the physical demand witnessed notable decline, falling by 36% over the previous year to 677 tonnes during the second quarter.

Refinitiv expects gold to continue its uptrend, backed by overall macroeconomic situations. However, it may face liquidation in the short term, as it reaches close to its previous record highs. It expects gold prices to average at $1,715 per Oz in 2020.

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