What's going on?

Investors have been stocking up on gold to make sure they�re kitted out for risky waters, and they�ve pushed its price to a seven-year high.

What does this mean?

Gold is seen as a relatively stable store of value, which means investors often seek it out in times of uncertainty � and these virus-hit times are nothing if not uncertain. But there�s another reason the commodity might be doing well: investors are increasingly betting that central banks will respond to the epidemic�s economic damage by cutting interest rates, which would benefit assets that don�t provide a regular income, like gold (tweet this). No great surprise, then, that investors have been rushing to buy gold exchange-traded funds: the amount of yellow metal those funds are holding has risen for 22 business days straight.

Why should I care?

The bigger picture: All dollared up.
What�s especially unusual about this gold rally is the accompanying rise in the US dollar’s value, which hit its highest level in almost two years. Since gold is priced in dollars, it becomes more expensive to non-US buyers when the currency is strong. That tends to reduce gold demand, in turn lowering its price. But this year, investors have been seeking shelter in both gold and US assets � and it�s the rush to buy the latter that�s pushing up the dollar.

For markets: No zen for the yen.
Like gold, investors usually expect the Japanese yen to rally during times of uncertainty. But that�s not happened in 2020: the currency hit a nine-month low last week on fears the coronavirus would push an already-struggling Japanese economy into recession. And with Europe�s economy also in trouble, investors might see the US as their best option right now. That could explain why US stocks have hit record after record this year, and why yields on both US government and corporate bonds � which move inversely to bond prices � hit new lows last week.