Why is gold rallying?

As global stock markets tick further into unchartered territory, another asset class has been catching investors’ eyes: 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 coronavirus uncertainty continues to push the precious metal higher, some experts are suggesting gold could hit record highs. That has left many people wondering whether now is the right time to invest. CNBC Make It spoke to the experts to find out their advice.

Why is gold rallying?
Gold is up about 19% so far this year, as lower interest rates and central bank stimulus have supercharged existing upward momentum for the precious metal. Gold is typically seen as a “safe haven” asset in times of uncertainty because it is less volatile than other investments, like stocks. What’s more, the metal moves inversely to the U.S. dollar, meaning that when the greenback moves lower — as it has done lately — gold moves higher.

The current coronavirus downturn is slightly different, however. Even as Covid-19 cases have risen and economic data worsened, equity markets have continued to rally. Cameron Alexander, director of metals demand at market data company Refinitiv, said that has caused gold to enter new trading territory.

As the pandemic rattled markets in late-March, gold too suffered a sell-off as investors rushed to free up cash. Since then, however, buyers have returned to gold, seeing it as a safe store for their money. So far this year, inflows into physical gold exchange-traded funds (ETFs) globally is around $12 billion, according to BlackRock iShares data.

That has experts predicting higher swings ahead. “I wouldn’t be surprised to see gold test the all-time highs set in 2011 at around $1,900 per ounce,” Thomas Taw, head of APAC iShares investment strategy at BlackRock told CNBC Make It.

Last month, Bank of America backed a similar “all-time high” prediction. In April, the bank said the precious metal could hit $3,000 per ounce. BofA Securities’ commodities strategist Michael Widmer said that surge would be fueled by continued global uncertainty — at least over the next few years.

Gold has surged due to the pandemic — and it could keep going. Here’s what to know about investing now, CNBC, Jul 20