Last week was the most favorable for gold prices since the financial crisis of 2008-2009. Growth of quotations contribute to the purchase of investor assets-shelters, as concerns about the outbreak of coronavirus has led to sales in the stock markets.
gold Prices usually rise when investors are looking for alternatives to shares and other risky assets during the turbulence on the market and when they expect lower fed interest rates.
the Yield on government bonds fell and the US stock markets continue to fall, which suggests the concern in the markets due to the slowdown in the US and other major economies due to the outbreak of coronavirus. Investors expect the fed will cut interest rate by half a percentage point. Earlier this week, the Central Bank was urgently lowered interest rate.
"Gold, along with government bonds demonstrates immunity to the virus that caused significant damage to other markets," — said OLE Hansen of Saxo Bank. According to him, investors have no reason to fear that they are missing something by buying gold that does not bear interest rate of return because of the outbreak of coronavirus, the yield of Treasury bonds in real terms fell below zero.
Over the last 15 years the gold price showed such a sharp weekly growth only twice: after the collapse of Lehman Brothers in September 2008 and three months later when the Senate refused to provide financial assistance to American manufacturers of cars, after which the problems started on the markets throughout the world.
Rise in the price of gold also contributes to the weakening of the dollar. Prices for the precious metal are formed in US currency, so gold becomes a more attractive asset for holders of other currencies. The dollar index WSJ, which tracks the dollar against a basket of other major currencies for the week fell 1.7%.
Rise in price of gold, which on Friday was trading near 7-year high, spurred growth of stock quotes of mining companies. They are more expensive in contrast to other sectors of the stock market. So, this week paper South African companies AngloGold Ashanti Ltd and Gold Fields Ltd increased in price by 21% and 23%, respectively. Shares Of Newmont Corp. Thursday rose by 17%.
For the past period of this year, gold prices increased by 11%. The S&P 500 decreased by 6.4%. However, the price of gold from time to time decreased. For example, they fell by 28 February, together with quotations on the stock market. Then the decrease in the price of gold traders was explained by the sale of gold by hedge funds and other investors for the performance margine call.
