Introduction

Gold is an asset that will never go out of style. Due to the instability in the global markets, gold was one of the most sought after asset classes this year, in 2020. Gold is one of the rarest common metals on the planet. Due to the spike in gold prices, funds investing in the yellow metal saw their returns skyrocket in 2020.

Gold funds have returned an average of 26.84 percent over the last year. Gold funds topped the return charts in the March quarter, returning 11% in 2020.

Gold funds have returned an average of 26.84 percent over the last year. With 11 percent returns in the March quarter, gold funds led the return charts.

Gold has risen significantly in value over the previous two years for a variety of reasons. However, it has failed to reach the 2011 high point. What are the numerous elements that could have an impact on gold’s price in the future?

Although Covid-19 immunisation has begun to reach the marketplace, the introduction of a new strain of Coronavirus could cause gold to rise. In general, any epidemic will devastate the world economy, and gold’s price will rise during these uncertain times. Although the likelihood of this situation occurring in the near future is remote, one never knows.

As global stock markets continue to tread new ground, another asset class has piqued investors’ interest: gold.

Gold prices inched higher earlier this month to trade over $1,800 per ounce, crossing a major psychological milestone not reached since 2011.

Now, as oncerns about the coronavirus continue to drive gold prices higher, some analysts believe the precious metal could reach new highs.

Many people are now thinking if now is the appropriate moment to invest. CNBC Make It chatted with experts to get their recommendations.

Why is gold on the rise?

Why is gold rallying?

Gold has gained almost 19 percent so far this year, as reduced interest rates and central bank stimulus have accelerated the precious metal’s upward trend.

Because it is less volatile than the other investments, such as equities, gold is sometimes referred to as a “safe haven” asset in times of uncertainty. Furthermore, gold goes in the opposite direction of the US dollar, meaning that when the greenback falls — as it has recently — gold rises.

The present coronavirus outbreak, on the other hand, is a little different. There are two forces pulling gold in opposite directions.

DIRECTOR OF METALS DEMAND, REFINITIV

Even as the number of Covid-19 cases has increased and economic data has deteriorated, equity markets have continued to rise. According to Cameron Alexander, director of metals demand at market data firm Refinitiv, gold has entered new trading area as a result.

“Gold is being tugged in two directions: one is uncertainty, and the other is the pandemic, which is still spreading,” Alexander added. “However, equities are still doing really well,” he observed, citing central bank stimulus as a factor.

Prices set to rise

As the epidemic wreaked havoc on markets in late March, gold prices plummeted as speculators scrambled for cash.

Buyers have returned to gold since then, perceiving it as a safe haven for their funds. According to BlackRock iShares data, global inflows into physical gold exchange-traded funds (ETFs) have totaled roughly $12 billion so far this year.

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Experts foresee higher swings in the future as a result of this. “I wouldn’t be shocked to see gold test the all-time highs reached around $1,900 per ounce in 2011,” Thomas Taw, head of BlackRock’s APAC iShares investment strategy, told CNBC Make It.

Last month, Bank of America predicted an “all-time high” for the stock market. The bank predicted that the precious metal will hit $3,000 per ounce in April. According to Michael Widmer, a commodities strategist at BofA Securities, the spike will be propelled by ongoing global uncertainty – at least for the next few years.

Widmer told CNBC Make It, “At the moment, there are a lot of concerns (about keeping gold up).” “Before gold prices start to peak, we need a little more visibility.”

Is now the time to buy?

With such a bullish view, huge potential profits are expected in the near future. However, with prices already at multi-year highs, entrance expenses are also high.

This begs the question of when to purchase. The question, according to Albert Cheng, CEO of the Singapore Bullion Market Association, should be rephrased from “when” to “how much?”

There is never a bad time to invest in gold, and every investor should have some on hand.

Albert Cheng

“There isn’t any good time to buy gold,” Cheng said, predicting a price of $2,000 per ounce by the end of the year. “Gold should be a part of every investor’s portfolio.”

Typically, financial consultants advocate allocating 1% to 5% of an individual’s whole portfolio to gold. According to Cheng, this figure could rise from 5% to 15%. 

“Gold is still a modest part of most people’s portfolios. However, even a 1% to 2% increase might have a significant impact,” Alexander of Refinitiv noted.

How to invest?

While gold was one among the world’s first forms of currency, there are currently a variety of ways to invest in the precious metal.

“Investors should first figure out why they want to acquire gold,” said Taw of BlackRock.

“Is it for the potential of a higher return or for portfolio diversification?”

Then you should become acquainted with the numerous possibilities as well as the hazards involved, he said.

Here are a few ideas to get you started.

Invest in genuine gold bars and coins – The most conventional manner of gold ownership is to purchase actual gold bars and coins.It is incredibly liquid and easy to buy and sell in many places.

Physical gold assets are now available for purchase in a variety of locations, including banks, but buyers should be mindful of additional charges such as insurance and storage.

Buy ETFs/ETCs — Exchange-traded funds and commodities are vehicles that allow you to track the underlying price of gold without having to possess the item physically. The ETF alternatives have been popular if you merely want to play the gold price.

Buying gold-related stocks — Companies that are closely tied to gold, such as gold miners or gold producers, are another approach to invest in gold because their performance tends to reflect that of the metal. They are, nevertheless, vulnerable to stock market fluctuations. They do quite well in a bull rise, but they are vulnerable to pullbacks

Buy alternatives — Alternative vehicles, such as gold-backed cryptocurrencies or foreign currency trading, provide another way to invest in gold, although they are normally reserved for more experienced investors.