Gold Glitters As Coronavirus Crisis Intensifies: 5 Top Picks

The aggravation of coronavirus pandemic with each passing day has left investors scurrying for safe-haven assets as they remain apprehensive regarding the recovery of global economic growth and its consequent impact on stock markets. This, in turn, has triggered a demand for gold, which is considered as a key investment option during times of financial turbulence.

Gold Price Gains Momentum

On Apr 2, future price of gold for June delivery increased 2.9% to settle at $1,637.70 an ounce on Comex. This was the biggest one-day percentage gain for the most-active contract since Mar 24. The gold price has witnessed a recent low of $1,576 per ounce on Mar 31, after rallying to $1,707.80 per ounce on Mar 9.

The decline in gold price in March can primarily be attributed to two reasons. First, investors were selling everything including equities, bonds and precious metals owing to the panic caused by an unprecedented non-financial hazard — the coronavirus — to global financial markets. Second, partial or full lockdowns by various government to enforce social distancing in order to curb the spread of the virus, raised concerns about gold mining.

However, the precious yellow metal regained momentum after President Donald Trump told U.S. citizens to prepare for “very, very painful two weeks” on Mar 31. Moreover, weak economic data dented market participants' confidence.

The initial jobless claims by the Americans skyrocketed to a historic high of nearly 10 million for two consecutive weeks ended Mar 21 and Mar 28. The United States has never lost more than 1.4 million jobs in any two successive weeks in its history. Moreover, U.S. auto sales declined to 11.4 million in March from 16.7 million in February.

Further, U.S. manufacturing index for March, separately reported by the ISM and the IHS Markit, revealed that it contracted to its lowest level since 2009. Meanwhile, the Conference Board reported that the U.S. consumer confidence in March declined to 120 from 132.6 in the prior month.

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