Based on dealership data, the retail demand for gold isn't showing any signs of abating. With the coronavirus crisis raging, private investors are even prepared to pay extra to get their investment coins. Sellers have raised their fees, but this didn't scare off buyers.
The reason is that there is still some deficit of gold bars and coins on the market, caused by the disruption in the work of many mints and gold refineries. Investors are viewing gold as a safe haven asset, and this situation will continue until stability is restored. The gold market must find a balance of supply and demand; only then can the prices for investment gold stabilize.
It's worth reminding that back in 2019, the demand for gold bullion and coins fell by 20% to reach its lowest point since 2009. However, things changed radically in 2020. According to the US Mint, the demand for investment coins is now at the highest level in three years. The sales figures are simply astonishing. While the world has suddenly changed for the worse for many, a lot of the gold market participants expect good gains this year, due to several key factors.
One of these factors is the aggressive monetary policy pursued by some central banks, which can lead to a devaluation of their national currencies. For example, the euro price of gold has recently reached an all-time high of 1,600 euro per ounce. This shows that the euro is depreciating against gold.
Furthermore, we see an inflow of capital into gold-backed ETF funds. This is important for gold prices: according to experts, ETFs will keep supporting the market growth at least until the end of the year. However, gold investors must remember that there will still be occasional corrections during the rising trend. Long-term investors needn't be worried: things will still turn out in their favor.
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