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COVID-19 Is a Game Changer for Precious Metals

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Within a month, the coronavirus pandemic has radically shifted the biggest markets in the world with precious metals and investors have started seeing new patterns.

After a year of being the rising stars of precious metals, Palladium and Rhodium’s value unexpectedly dropped sharply. In only a few days Palladium lost half of its value and Rhodium’s price fell from 14,000 dollars to 3,000 dollars.

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On the other hand, the fall of these two precious metals and the concern over the pandemic, has opened the way to more atypical investments, such as agricultural goods: Rice, Coffee and Tea, are on the rise, due to higher consumer demand.

While a fifth of the world’s population is currently staying at home, online traders are investing in gold, returning to a safe haven staple, after it shortly lost 10% a few weeks ago. 

Nonferrous metals stay the course

Palladium, Rhodium and even Gold: the global crisis caused by the COVID-19 pandemic is redefining the markets. According to French daily La Tribune: “the fall is general but limited in the base metals: copper, aluminium, nickel, zinc.”

The newspaper also noted “the historic drop in natural gas prices and the oil war case between Riyadh and Moscow”.

Read on Alvexo: “Saudi Arabia Is Starting An Oil Price War”

Palladium and Rhodium in free fall

Palladium and Rhodium in free fall

Spotted under-the-radar but nonetheless a fruitful investment, Palladium and Rhodium suffered from Gold’s free fall. Within a quarter, the two “outsiders” lost their status.

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Since palladium has lost nearly 50% of its market value in less than two weeks, rhodium’s value went down from $14,000 to $3,000.

Other metals such as copper lost value, which is down 10% and moreover silver has lost 30% of its value. However, these precious metals are said to recover quickly, since gold has been showing promising results these past few days.

Gold is back

The ultimate safe haven has also experienced a lot of turbulence within the past few weeks. Last Monday, when the World Health Organization designated the Coronavirus as a “pandemic”, gold lost nearly $ 200 within a day.

In other words, gold lost almost 13% of its value, the largest drop since 2011, in only one day. According to La Tribune,in China, (the fall of gold) will probably be absorbed at the end of the first quarter, and we should have the same outcome in Europe but at the end of second quarter “.

Wednesday, 25 March, the ounce of gold was up +4.52% to 1,620 euros and the 250 gram ingot jumped to +7.47% to 12,950 euros.

Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.