The coronavirus goldrush: Fears of a pandemic push prices of the precious metal to a 7-year high as investors scramble to protect their savings
Panicked investors have pushed gold to an all-time high in sterling terms as they scrambled to protect their savings from the coronavirus contagion.
European stock markets were in turmoil yesterday as a flare-up of the deadly Covid-19 virus in Italy claimed six more lives.
Investors were quick to drop travel firms and miners, amid fears that the outbreak would deter travel and stymie industrial activity, and rushed to the relative safety of gold.
European stock markets were in turmoil yesterday as a flare-up of the deadly Covid-19 virus in northern Italy claimed six more lives
The precious metal, which is seen as a safe haven in times of uncertainty, hit a record £1,300 per ounce before settling later in the day at £1,293.
In dollar terms, it jumped to a seven-year high of $1,677.21 per ounce.
But the flood of money out of equities wiped almost £361billion off the value of Europe’s listed companies.
The FTSE 100 index of Britain’s biggest listed companies accounted for £62billion of those losses.
And the price of oil plummeted as traders began to worry that the economic effect of the coronavirus would be worse than originally anticipated.
Brent crude was trading down 5.3 per cent at $55.42 per barrel, well below the $69 level at the turn of the New Year.
Florian Hense, an economist at broker Berenberg, said: ‘We still have to brace for worse news in the next few months linked to the outbreak of the coronavirus and its spreading beyond China.
‘Lower demand for travel and tourism is already harming services activity.
‘Manufacturers may face increasing supply chain disruptions in the weeks to come.
‘The surge in cases in Italy presents a risk to the European economic outlook. The potential lockdown of bigger parts of the highly industrialised region accentuates the downside risks for Italy’s neighbours, too.
‘Germany, Switzerland and Austria all have close links to northern Italy’s manufacturing hubs.’ The FTSE 100 slid by 3.3 per cent or 247.09 points to 7156.83, in its worst day in four years.
Travel companies took a thrashing, with Easyjet being the biggest faller, tumbling by 16.7 per cent, or 251.5p, to 1257p.
Tui was close behind, shedding 9.8 per cent, or 83.4p, to 767.6p. And British Airways owner IAG lost 9.2 per cent, or 57p, closing at 566p.
Primark’s owner Associated British Foods warned several of its food factories were operating at reduced capacity due to labour constraints.
And it said it could run out of some clothing lines if factory delays were prolonged. Its shares slipped 1.6 per cent, or 40p, to 2543p.
Across the rest of Europe, Germany’s Dax, France’s CAC and Italy’s FTSE MIB indices were all down between 4 per cent and 5.4 per cent.
And the US was not immune, as the S&P 500 slid 3.4 per cent.
But American billionaire Warren Buffet, who has been dubbed the Sage of Omaha for his investing prowess, advised investors to be cautious of selling on impulse.
He said the coronavirus was ‘scary stuff’, but added that most investors should keep a long-term outlook.