In early 2020, before the Corona crisis broke out, the gold price had just hit the $ 1,700 mark, a new five-year high. But he, too, was unable to escape the dramatic slump in the stock markets in the wake of the global escalation.The gold price fell 15 percent to $ 1,470 in March and did little to honor its reputation as a crisis currency, at least in the short term. Most of the losses are probably due to investors under pressure. The basic scheme is always similar: Securities are sold across the board to cover losses and build up cash holdings. The price losses on the futures exchanges trigger margin calls and suddenly securities loans are no longer sufficiently secured.In order to cover the liabilities, professional investors then sell off their remaining profit positions, which does not spare long-term promising investments. In addition, stop prices and trend-following electronic trading systems accelerate the downward slide.
Decline in gold was just mild
However, the decline in the gold price was relatively mild. After the brief slump, the price of the yellow precious metal is now rising again and even hit new highs of $ 1,720 in April. Stock indices, on the other hand, have recovered from their lows, but are still a long way from highs. The worldwide expansion of the money supply has taken on a new dimension as a result of the bailout programs set up by central banks and governments and is driving the price of the yellow precious metal further up.