Gold prices climbed on Monday morning amid extreme concern of market participants with the news about the detection of a new strain of coronavirus infection in the UK. Investors began to feel the tension again, which is pushing them into the sector of defensive assets, that is, into the "safe haven" of gold.
The price of gold futures contracts for delivery in February on the trading floor in New York rose 0.93% or $17.65, which sent it to $1,906.55 per troy ounce. A consolidation above the strategically and psychologically important mark of $1,900 per troy ounce may mean steady growth in the future, but this is only possible if the success of the precious metal does not become a temporary trend. So far, there is every reason to believe that the rapid increase in value will continue.
The price of silver futures contracts for March delivery also gained 4.45% and reached the level of $27,192 per troy ounce.
Market participants quite sharply changed their mood on the news about the coronavirus infection. The discovery of a new strain of COVID-19 in the UK has thrown investors off balance. Moreover, there was nothing comforting in the statements of the British authorities and scientists. In particular, the advisory council on new and emerging respiratory viral threats of the country confirmed the information that the new mutation is extremely dangerous and is spreading at a great speed. In this regard, new restrictive measures were immediately taken on the movement of the population in London and almost the entire south-eastern part of the country. The British were urged to be even more careful and warned of the impending danger.
According to preliminary data from British scientists, the new type of coronavirus is about 70% more contagious than the previous strain, which further increases the fears of market participants. The threat of its rapid spread is very high, as well as another, more serious lockdown. Therefore, some neighboring countries of the UK have already stopped transport links with the country. In particular, flights from Turkey and Israel have been canceled.
Against the background of the panic attack that has begun, the precious metals market feels only more confident. Gold retains its position as a defender, which makes investors turn to buy it more often. This has already become an indication that demand for the precious metal has increased and will continue its upward movement in the short and medium-term. This fact is also confirmed by the growing general uncertainty in the world.
The global economy seems to be once again facing global risks that can upset the already fragile balance that has only recently begun to take shape. The inevitable increase in the number of new coronavirus infections will only have an even more negative impact on the entire recovery process, and in the worst case, it can lead to a new lockdown.
However, market participants do not cease to have hopes about the effect of the developed vaccines against COVID-19. While there is a chance to take everything under control and cope with the pandemic.
