Despite the general stability, the price of gold can fluctuate in times of crisis, as was just the case. In the medium term, however, gold will remain a safe investment port.
Concerns about the spread of the corona virus and the associated fears of recession have plunged the financial markets into massive turmoil. Share prices plummeted, while volatility indices peaked recently, most recently in the 2008 financial crisis. Investors are therefore looking for safe forms of investment – but these too have suffered from fluctuations in the past few days.
Gold is one of the most important “safe havens” on the financial markets and is considered a crisis currency. Nevertheless, like all other asset classes, gold can be caught by a general sell-out in the markets and slide at least in the short term. So it should have happened with the current price drops in the wake of the coronavirus crisis. The World Gold Council (WGC) writes that virtually all forms of investment have experienced massive haircuts over the course of the week. “Gold was no exception,” it says in the analysis. In addition, investors should have loosened cash with gold sales to make up for losses in other asset classes.