After months of coronavirus lockdowns around the world, investors have flocked to safe haven investments like gold bullion, pushing up the gold price close to the all-time high.

On May 18th gold hit a price of $1,765.55 per troy ounce, the highest it has been since 2012. The near-record spot price came as investors sought a safe haven to protect their wealth following dire warnings from the US Federal Reserve chair, Jerome Powell.

Powell said the United States was suffering, "the biggest shock that the economy's had in living memory." He added to the gloomy statement on the US economy by saying any recovery would also be slow. He feared that following the economic shutdown a full recovery may not be achieved until the end of 2021.

Later in the same day gold prices fell slightly as stock markets rallied in hopes of a Covid-19 vaccine from American biotech company Moderna. The Moderna vaccine story was first run by the New York Times. Sadly, it proved to be more hope than substance and once more the gold price resumed its climb.


Gold has made steady gains throughout 2020 barring a few weeks in March, during which the stock market crash forced investors to meet margin calls, and sell gold in large volumes to pay these contracts off.

2019 was a year of US economic confidence. In the fourth quarter of 2019, real GDP increased 2.1%, and 2020 opened with gold sitting at around $1,517, with the trade war, and escalating tensions with Iran already pushing gold up.

The spread of coronavirus however has quickly dominated the economic outlook for the US economy. On January 28th, the federal government publicly released its approach to Covid-19 testing. By January 31st, in the hopes of saving the US from the coronavirus, President Donald Trump was limiting entry into the United States.

The restrictions proved ineffective however, and the US has gone on to have the highest number of cases and deaths globally. Stock markets crashed in March as shutdowns were enacted around the world, significantly impacting retail and industrial income.

Unemployment rates have risen significantly in the US, with up to a staggering 36 million people claiming unemployment by May. Government spending to try and prop up the ailing economy is also expected to push national debt to $25 trillion, and has raised fears of just how much the US can realistically keep borrowing.

A recession seemed unthinkable for the US economy in 2019, with GDP growth stronger than much of the rest of the world. Now however it seems inevitable given the losses in recent weeks. Advance estimates suggest Q1 2020 will see US GDP contract by 4.8%, the first step on the road to recession. The damage the lockdown has caused is expected to be felt for years, and in his statement on Monday, Jerome Powell warned more could lose their jobs in the months to come as businesses adapt to the new landscape of social distancing.

He believes unemployment could start to fall over the second half of the year if lockdown restrictions cease. However, he went on to caution it would only happen if ending lockdown, “doesn’t create further problems with the virus”.

With stock markets crashing, gold has instead gained in value, and has reminded many investors of its status as a safe haven investment. Demand globally has surged, at times outstripping supply, and some analysts are predicting gold will reach $3,000 by the end of 2021 given the severity of the economic damage coronavirus has caused. During the financial crisis of 2008 it took 3 years for gold to reach the current all-time record of $1,896.50 so the current rally could mark the beginning of a new bull run for gold not seen in a decade.