3 Ways the COVID-19 Pandemic Affected the Gold Market
The COVID-19 pandemic wreaked havoc across the globe. Many businesses had to shut down as they could not sustain the prolonged lockdowns and extended periods of low demand. Businesses always aim to keep their costs low and ensure profitability levels remain high, but the pandemic became an obstacle in this case.
The gold market also felt its affects Let’s find out how it suffered and whether it has been gradually improving.
Initial Impact on Prices
The pandemic’s effects started becoming apparent in the commodity market at the start of 2020, as the majority of the commodities including copper, nickel, silver, platinum, and many more suffered a sharp decline in prices within a 3-month period at the turn of the year.
However, gold being one of the safest investment options when it comes to metals, held its value, and went up by 5% during that same time.
This was due to a drop of about 7.1% in the value of the US Dollar last year. Investing in gold is usually a good option when other investments decline, as it’s both redeemable and convertible unlike fiat currency.
Lower Demand for Gold Products
Due to the adverse economic impact of the pandemic on the economy, aggregate demand shrunk. Due to irregular buying patterns and a generally lower demand for items such as jewelry, the gold market saw a major decline.
Revenue for the jewelry industry in the US declined by 18.5% in 2020. However, consumers feel that it’s safe to start investing and purchasing again.
Emergence of Crypto
Possibly the biggest impact on the gold market during the pandemic was the unprecedented rise of the cryptocurrency market. Since people were advices to stay indoors and avoid social interactions, going out and buying things—including gold and jewelry—became less common.
Since crypto is completely digital, it became an avenue of investment. It quickly gained popularity, as now almost 14% of the population owns crypto.
Experts predict that the gold market will be back up this year as things are starting to ease up after the pandemic. If you want to make the move towards investing in gold, now might be the best time as prices are still low. Get in touch with us to buy gold bullion bars and coins in a safe and secure way.