Logo of Phnom Penh Post newspaper Phnom Penh Post - Gold shines bright in dark shadow of coronavirus

Gold shines bright in dark shadow of coronavirus

Content image - Phnom Penh Post
Demand for gold has skyrocketed since the coronavirus outbreak. It hit a seven-year peak on commodity markets this week. AFP

Gold shines bright in dark shadow of coronavirus

Gold, prized by investors in times of crisis as a safe haven, is experiencing surging demand in the face of the coronavirus outbreak – from both commodity traders and retail buyers.

The precious metal had forged a seven-year peak on commodity markets this month as traders sought shelter from the Covid-19 pandemic and its destructive economic impact.

The commodity has also rocketed as investors seek to guard against rising inflation – with many central banks injecting immense amounts of liquidity into the financial system to counter virus fallout.

‘Phone has not stopped’

“The phone has not stopped ringing” because “demand has exploded”, said Alessandro Soldati, boss of Gold Avenue, the online retail arm of Swiss refiner and ingots producer MKS PAMP Group.

Over the last three weeks, as the new coronavirus strain spread across the globe, Gold Avenue experienced more sales than during the entire final quarter of last year.

With most orders placed online, Gold Avenue has “all the tools” to help meet the rapid growth in demand, according to its chairman Omar Liess.

Some companies are encountering some issues meeting the sheer volume of demand.

But the main problem is logistical – because so many flights are cancelled because of the coronavirus outbreak.

Customers still however have the option of keeping their gold coins and bars in safes – because trading companies usually offer such storage solutions.

And if they do want to take physical delivery of the glamorous precious metal, then customers face the prospect of a long wait.

US-based online precious metal retailer JM Bullion has warned its customers to expect delays of more than 15 days as a result of “extreme order volumes”.

Refineries hit by lockdown

Gold had already soared in value in the London Bullion Market to reach a December 2012 peak of $1,703.39 per ounce on March 9.

It has since fallen on modest profit-taking but remains at an elevated level of about $1,600.

That has given a shot in the arm to retail prices – and demand shows no sign of abating after the global death toll from the new coronavirus strain topped 20,000 this week.

“Demand [for gold] has risen significantly in the past three to four weeks,” said Liam Sheasby, marketing chief at British online bullion firm BullionByPost.

Experts argue there is no shortage of gold at the moment, apart from for newly-minted coins – but the situation is becoming more complex.

In Switzerland, gold refining titans PAMP, Valcambi and Argor-Heraeus – which together represent one third of global production – have temporarily halted operations at the request of the government.

At the same time, South Africa on Monday imposed a three-week lockdown, as the African continent’s top gold producer grapples with Covid-19.

“The industry as a whole is affected” by lockdowns at key facilities, Omar Liess said.

‘Unprecedented crisis’

The Britain-based World Gold Council industry body issued a gloomy warning about the ongoing long-term impact of coronavirus.

“We are in the midst of an unprecedented crisis,” WGC chief executive David Tait noted on Wednesday.

“I have worked at the heart of financial markets for over 30 years and thought I had seen it all: Black Monday, Asian currency crisis, the dotcom bubble bursting, and the global financial crisis. But this is different.

“We are reeling the wake of a health and economic shock which monetary and fiscal policy is ill-equipped to deal with. Like most asset classes, gold has been affected by widespread, rapid-fire asset sales and a dash for cash.

“Notwithstanding recent price volatility, I believe gold is as relevant as ever and will play an increasingly important role in investors’ portfolios in the years to come.”

MOST VIEWED

  • Seven positive for Covid-19, Hun Sen confirms local transmission

    Prime Minister Hun Sen announced that there has been local community transmission of Covid-19. However, he urged the people not to panic even though the Ministry of Health announced the discovery of seven new cases on Sunday. Among the victims are Chhem Savuth, the director-general

  • Cambodia at ‘most critical moment’, Hun Sen warns

    Prime Minister Hun Sen said the first community transmission of Covid-19 in Cambodia has led the country to the “most critical moment” that warranted urgent, large-scale operations to contain the pandemic. Hun Sen, who confirmed the first local transmission on November 28, said the source of

  • PM confirms community transmission, calls for unity

    Prime Minister Hun Sen has called on the public to stay calm, unite and follow the Ministry of Health guidelines after the wife of a senior official tested positive for Covid-19 in the Kingdom’s first case of community transmission. The case has drawn criticism

  • Over 110 garment factories close

    A government official said on November 22 that at least 110 garment factories had closed in the first nine months of the year and left more than 55,000 workers without jobs – but union leaders worry those numbers could be much higher. Ministry of Labour and Vocational Training undersecretary

  • Singapore group seeks $14M in damages from PPSP over ‘breach of contract’

    Singapore-based Asiatic Group (Holdings) Ltd is seeking a minimum of $14.4 million relief from Cambodia Securities Exchange (CSX)-listed Phnom Penh Special Economic Zone Plc (PPSP) for allegedly breaching a power plant joint venture (JV) agreement. Asiatic Group’s wholly-owned Colben System Pte Ltd and 95 per

  • PM vows to protect Hun family

    Prime Minister Hun Sen has vowed to continue his fight against opposition politicians who he said intend to smash the Hun family. Without naming the politicians but apparently referring to former leaders of the Supreme Court-dissolved Cambodia National Rescue Party (CNRP), Hun Sen said there