2020 has seen the world enter into one of the most chaotic economic and health crises in many decades. As the coronavirus pandemic continues to rage on in many parts of the world, including the US, the future remains uncertain.

In addition to being a public health challenge, coronavirus has also caused economic destruction in most countries. The US GDP contracted an almost unprecedented 10% in the second quarter of 2020. With all that said, how will the pandemic affect the prices of precious metals?

International Travel and Trade

Both international travel and trade have plummeted due to the pandemic. In quarter 3, international trade is forecasted to decline by nearly 30%. Additionally, with high unemployment numbers and non-essential business shuttered, there is likely a decline in imports.

That also means that precious metal imports will decrease. Furthermore, with the economy still looking shaky, many people will choose to purchase precious metals.

Therefore, an increase in demand and a decrease in supply is likely to increase precious metal prices.

Precious Metal Sell-Off

On the other hand, since economic conditions are so unprecedented, uncertain, and severe, maybe precious metals won’t increase.

With such unemployment, people will try to raise money from other sources. Therefore, there could be a massive sell-off of precious metals as people try to recover from the virus’s ramifications.

Pawnshops in the country have seen a significant rise in people trying to liquidate valuables. Often these are precious metals like gold and silver. If precious metals are sold wholesale, then the increase in supply could cause the price to drop dramatically.

Economic Fall Out is Short-Term

Another scenario possible is that the economic fallout from the pandemic is short-term. The virus could be brought under control, and Americans could return to work. Therefore, productivity and spending would increase, which would cause the economy to rebound rapidly. The new economy could cause the price of precious metals to stabilize once again.

As coronavirus cases and deaths continue to decline, there are indications that this is possible. However, as with many scenarios during the pandemic, nothing is inevitable, and people will have to wait and see.

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