China’s COVID Response and the Price of Gold
COVID may have calmed down in certain areas of the world, but it is still a major concern in others. One of these places includes China, which is experiencing another 2020-like lockdown. It is no doubt that China’s COVID response will have a ripple effect throughout the world, especially on the price of gold. Keep reading to learn more about China’s COVID response, how it is affecting the price of gold, and when you should start investing to protect yourself during economic uncertainty.
What is China’s COVID Response?
Shanghai began a 2020-like COVID pandemic lockdown about a month ago. An article by CNN explains that China has introduced lockdown measures in its two biggest cities, Beijing and Shanghai – the twin engines that power much of the nation’s economy – in an uncompromising bid to stamp out Covid-19 outbreaks.
Shanghai is at the center of the latest outbreak, reporting upwards of 15,000 new cases a day. Authorities have responded with a city-wide lockdown that has lasted weeks, confining nearly all 25 million residents of the once-bustling financial hub to their homes or neighborhoods.
Meanwhile, Beijing officials have launched mass testing exercises, shut schools, and imposed targeted lockdowns on some residential buildings in a bid to rein in infections. Those actions have sparked fears of a wider lockdown similar to Shanghai’s. Many residents have complained of food shortages, lack of medical access, poor conditions at makeshift quarantine camps, and heavy-handed measures such as authorities separating infected children from their parents.
Unemployment hit a 21-month high in March. Many businesses have been forced to suspend operations in several locations, including automakers Volkswagen and Tesla and iPhone assembler Pegatron. The Chinese currency, the yuan, weakened rapidly this week, plunging to the lowest level since November 2020.
How Does It Affect the Price of Gold?
According to Gold.org, gold prices extended their strength last month. The SHAUPM in RMB and the LBMA Gold Price AM in USD rose further in March, ending Q1 with a 5.2% and 5.7% gain respectively, the largest since Q2 2020. Despite higher interest rates acting as a headwind for gold, factors including geopolitical risks and higher inflationary pressure have been supportive throughout the quarter. But the Shanghai-London spread plunged. The US$0.4/oz March average represents a US$4.4/oz decline m-o-m, the lowest since June 2020. This was a reflection of significantly weakened local gold demand amid the resurgence of the pandemic and subsequent lockdowns in major cities.
It continues that gold withdrawals from the SGE totaled 104t in March, 12% higher m-o-m and 38% lower y-o-y. The m-o-m rise was primarily due to the low base in February, which was a seasonally weak month for wholesale physical gold demand. The sizable y-o-y fall, on the other hand, reflected COVID-related lockdowns in cities such as Shenzhen – China’s gold manufacturing hub – and Shanghai
Why Investing In Gold Is Important
The price of gold tends to rise during world events, economic uncertainty, government unrest, and other political issues. As such, watching the events of China unfold shows us that there is no better time than now to invest in gold and protect your future.
Investing in gold will:
- Give you a hedge against inflation
- Diversify your portfolio
- Be easy and quick to liquidate should you need the cash quickly
There are many ways to invest in gold. They include collecting valuable gold coins, purchasing gold bars, ingots, or bullion, or opening a precious metals IRA. Investing in gold takes little-to-no knowledge or experience, unlike other investment streams All you have to do is find a reputable dealer such as Priority Gold, and you’re well on your way to financial safety.
Investing in Gold with Priority Gold
While China sticks to a zero-COVID policy, lockdowns will be inevitable. This means that you need to start protecting yourself, your savings, and your retirement in case the ripple effect begins to spread worse throughout the world’s economy. Make sure that your portfolio is diverse, that you are protected against inflation, and that you’re able to access your investment money quickly and easily (should you need it quickly and easily in an economic disaster).
If you are ready to invest in gold to protect your savings and secure your future, we can help. Priority Gold is one of the most trusted precious metals dealers in the United States with BBB A+ Rating, AAA Rating with Business Consumer Alliance, and 5 Stars Rating with TrustLink. We specialize in providing precious metals investment services with Security, Liability, and Great Convenience for customers. Our team is committed to helping to streamline their precious metals purchases at a fair price, selecting the right precious metals portfolios, and meeting their important financial objectives.
We offer Free Storage for qualifying Gold & Silver IRA accounts, a fast & easy gold buying process, and smooth IRA Transfer. And gold shows up on schedule when you need it. Priority Gold guarantees the highest standards of customer service, which comes with honesty, professional conduct, and the Ethical Code of Business.
For more information on how to get started investing in gold and other tips for protecting your financial future, visit us at prioritygold.com