The gold price in rand has surged to a record high as coronavirus panic hits shares
- Safe-haven assets are surging as investors rush to snap up long-term bonds and gold amid coronavirus panic that's tanking global stocks.
- Gold hit $1,690 an ounce this week, a seven-year high.
- In addition, yields on 10- and 30-year US Treasury bonds fell to record lows of 0.7% and 1.4%, respectively.
- The rally in the market's safest assets looks poised to continue as coronavirus spreads further.
- Read more on Business Insider.
Continued panic over the coronavirus outbreak has sent investors fleeing to safety, moving out of stocks and into haven assets such as gold and long-term US Treasury bonds.
Gold hit $1,690 an ounce this week, a seven-year high for the precious metal. On Friday, the yield on the benchmark 10-year US Treasury fell to a new all-time low below 0.7% as the recent bond rally continues to run. The 30-year US Treasury yield also hit a fresh low of 1.4%.
In rand terms, the gold price is at a record high, trading at above R28,100/oz.
This has given local gold mining shares a solid boost: Harmony's share price is up almost 20% so far this year - it has doubled over the past year, along with the share price of Gold Fields.
Markets have been roiled by the coronavirus outbreak that originated in Wuhan, China. On Friday, global stocks tanked, extending the recent rout. New infections of COVID-19, the illness the virus causes, have sparked increased panic that an outbreak will hinder global growth. So far, more than 100,00 people have been infected, more than 3,300 have died, and the illness has spread to at least 88 countries including South Africa.
On Friday, the JSE's all share index dropped 2%, while the rand was weaker to R15.70/$.
The US Federal Reserve on Tuesday slashed interest rates in the first emergency cut since the financial crisis, showing officials are concerned about the negative impact coronavirus is having on markets and the US economy. Still, investor confidence has not been bolstered - stocks continue to fall as investors flee to safety.
The rally looks poised to continue. Going forward, gold could re-test the key $1,700 per ounce level according to Lukman Otunuga, senior research analyst at FXTM.
"The general uncertainty and current risk aversion should support the precious metal due to its safe-haven nature," Otunuga told Markets Insider in an email.
Long-term US Treasury yields could also fall further as investors snap up the assets for protection amid market volatility. The bond market is "scaring the raccoons out of the air ducts like crazy right now," Neil Wilson, chief market analyst for Markets.com, said in a note on Friday.
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