Gold continues to provide a safe-haven option for investors considering a long-term investment, the chairman of Istanbul Chamber of Jewelers said Tuesday amid the precious metal’s tumble against the U.S. dollar as more people prefer to hold on to cash amid the coronavirus outbreak.
Mustafa Atayık argued that investors should avoid panic buying and selling during the crisis and consider buying gold as a long-term investment.
Atayık also said that the recent fall in gold prices offers a window of opportunity for couples and families to purchase jewelry before entering the wedding season. It is a Turkish tradition that during the wedding ceremonies, relatives and friends give gold to the new couple to celebrate.
He said the jewelry sector is experiencing a slowdown due to the coronavirus, especially because of the delayed weddings and engagements. "Experts predicted the virus to slow down by June at the latest. If this happens, the wedding season will continue as planned and help the sector gain new momentum," he said.
Atayık added that gold prices are currently increasing in step with the spread of the coronavirus and falling when there are new updates about a possible breakthrough in medicine or vaccine development efforts.
"We can expect a decline in gold prices if the spread of the coronavirus slows down in April as predicted by several experts," Atayık stated.
Gold surged Tuesday in the wake of the Fed's pledge of yet more cheap money to the American market and was last up 1% at $1,569.70 per ounce. However, prices were still down by 7.5% from their peak on March 9 amid high volatility in markets.
It was initially expected that gold would be chosen as a safe haven by global investors and local savings holders who have been selling heavily in stocks and bonds amid the outbreak. However, the pandemic and the extraordinary period caused by the virus seems to have triggered the "cash is the king" rule around the world, prompting a transition to cash around the world.
The leading central banks who are aware of this fact are now distributing money to the market through a "helicopter operation" to meet the cash needs in their markets.