1. Gold is regarded as a safe haven in times of crisis and a hedging investment in times of uncertainty. With the apparent resurgence of COVID-19, uncertainty is increasing again. While there have been recent signs of a recovery in the global economy after the downturn caused by the coronavirus pandemic, concerns are growing that many countries in Europe and Asia are facing a second wave of infections.

2. In order to reduce the economic impact of the COVID-19 crisis, central banks of various countries have injected liquidity into the market, and governments have launched huge economic stimulus plans. Given the influx of money, some investors expect currently low inflation rates to rise sharply for the foreseeable - and gold has traditionally been seen as a store of value in times of high inflation. Additionally, low interest rates and all signs so far that this situation will not change anytime soon have pushed gold prices higher.

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Influencing factors

1. U.S. dollar trend

The U.S. dollar exchange rate is also one of the important factors affecting gold price fluctuations. The impact on the gold market mainly has two aspects: First, the US dollar is the pricing currency in the international gold market, so it is negatively correlated with the price of gold. Assuming that the value of gold itself has not changed and the US dollar falls, the price of gold will show an increase in price.

2. Political Situation

In history, gold has been the best means of hedging. The so-called golden taels when the cannon is fired is the perfect interpretation of the hedging value of gold. Any time War or political turmoil often drive up gold prices, and sudden events often cause gold prices to surge sharply in the short term.

3. Inflation

As the only non-credit currency in the world, gold is different from banknotes, deposits and other forms of currency. It has a very high value in itself, unlike other currencies. Currency is only a representation of value, and its own value is negligible. In extreme cases, money becomes equivalent to paper, but gold will never lose its value as a precious metal at any time. Therefore, it can be said that gold can serve as a representative of eternal value.