COVID-19 Vaccine Could be a Bad Omen for Gold Prices—Here’s Why
The pandemic has affected the gold prices; they had increased by 28% in 2020. As the supply was restricted, due to lockdown in several countries and the demand had increased due to uncertainties in the economy.
The Outbreak Of COVID-19
The outbreak of coronavirus had severely affected the global economy. There were big shifts in the stock market and people were buying and selling shares frequently.
Central banks in many countries also slashed their interest rates which made borrowing cheaper, and people were encouraged to spend in order to boost the economy.
Industry And Job Opportunities Impacted
It had been a difficult year for job seekers and unemployment rates rose due to halted work and increased social distancing guidelines. The tourism and hospitality industry where I just standstill position.
Effect On Gold Due To Covid
People who had invested in gold were reaping its benefits with higher gains throughout the year.
However, the news of the Covid-19 vaccine has significantly impacted gold prices.
As the world is moving toward normalcy in their economies with fewer lockdowns, this has caused an adverse effect on the prices of gold.
Recession In Countries
The countries were facing a recession as the global economy shrunk by 4.4% in 2020.
Travel was banned and airlines were cutting their flights. The purchasing power of people had decreased, and retailers were getting bankrupt.
What Was Increasing The Gold Prices?
Before the vaccine announcement people were expecting gold prices to surge exponentially.
As the geopolitical tensions had risen people were investing in precious metals to safeguard their money.
The stock markets crashed, and gold performed an important role similar to the 2008 Financial Crisis.
Gold retailers were selling huge amounts of gold bars and coins, going out of stock.
Vaccine Announcement
Pfizer has announced the news of the Covid vaccine with an efficacy rate above 90%,which has spread positive energy throughout the world.
With this news, the uncertainty in the environment has decreased and people speculate that it would be safe to look for other investment options.
People have started selling off their gold bullions and coins. As they no longer need goals to be an inflation hedge against the currency.
This situation has led many experts to believe that it has been a bad omen for gold prices.
Although, gold has always been one of the most non-volatile investments to economic surroundings and will continue to be so as the vaccine can cover a limited number of people in the given year.
In addition to that, the demand for gold due to some cultures in certain countries will always remain constant.
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Our experienced account representatives will help you understand the market knowledge from spot pricing to economic events.
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