Investor appetite for gold, a classic haven asset, has surged amid the coronavirus-led stock market sell-off and monetary easing by the global central banks.
Holdings in gold-backed exchange-traded funds (ETFs) surged by 55 tons in the previous three days, or 1.8 million ounces, accounting for almost a third of year-to-date inflows, according to a preliminary tally by Bloomberg. Notably, inflows into ETFs this year are already more than half of 2019’s total.
Gold is currently trading at $1,644 per Oz, having hit seven-year highs above $1,700 earlier this week.
The Federal Reserve cut rates by 50 basis points last week and is widely expected to reduce borrowing costs further by 75 basis points next week. The Bank of England also reduced rates by 50 basis points on Wednesday. Meanwhile, Italy plans to spend 25 billion euros ($28.3 billion) on measures to help combat the economic effects of the outbreak.
Markets now await details on the timing and size of government stimulus in response to the coronavirus.