One of the oldest and most-trusted safe havens in times of crisis,gold has now become scare as investors are holding onto this precious commodity to be safe after the unstable economy got worse thanks to the Corona virus.
Investors almost lost their minds after it plunged on Friday by as much as 5%, the most in almost seven years.This caught many billionaires flat-footed and scrambling for explanations as to what had just happened.The plunge came as a result of gold investors not wanting to sell due to the unstable economy but are still forced to cover the losses in other asset classes.The investors were complaining that as much as their money is safe in gold they are still making great losses in other sectors.
Fear over the economic fallout from the coronavirus has unnerved markets, sending the S&P 500 index toward its worst week since 2008. The outbreak has further undercut investor demand for raw materials, which was already wavering because of increasing supplies and concerns over global trade wars. Returns from commodities have plunged on worries that the fast-spreading virus will crush demand for raw materials, fuel and food across the globe.
Commerzbank AG analyst Carsten Fritsch told livemint on Friday “It’s bloodshed, It first started with forced selling from equity investors who also sold their gold positions to cover their losses in equities and also to cover margin calls. Gold investors don’t want to sell but are forced to cover the losses in other asset classes.”
Gold fell the most this week since June 2013, according to Bloomberg generic pricing. The metal was down 4.5% at $1,571.05 an ounce as of 1:35 p.m. in New York. Other precious metals including silver and platinum also dropped, with palladium sliding the most since 2008.