Gold prices continue to soar, as UTEP economist says investors flock to it in uncertain times

EL PASO, Texas -- The price of gold has increased substantially over the last three months as investors flock to this precious metal in times of economic uncertainty, according to UTEP economics and finance Prof. Tom Fullerton.

Gold was trading at $2,068 per ounce on Thursday at 10 a.m. MT, and six hours later it had jumped about $7 to end the day at $2,075.20 as the markets closed.

Although some are dazzled by the sparkle of jewelery, others lean on gold when the economy's prospects seems uncertain.

“Gold represents what financial analysts refer to as a commodity, in times of uncertainty investors will flock to it because it represents a flight away from uncertainty,” Fullerton explained.

“Another source of uncertainty is nobody really knows when the recession is going to end, in part because of how deep the recession is going to be remains a mystery,” he added. “The bankruptcy rates for both households and businesses can be exasperated in coming weeks that can cause the recession to be even deeper.”

However, he said the increase in gold isn't as much of a sign of a recession as it was in other years.

Fullerton told ABC-7 that trade yields are already low, but the stock markets are still continuing to rise for the most part of 2020, even though there is pronounce volatility.

“It’s not the recession so much as it is the volatility in the equity markets and the other financial markets that is causing the flights to go in the form of trying to protect asset values,” he said.

El Paso jewelry store owner Susan Eisen says the fluctuation is affecting her business.

“It’s a double edge sword when gold goes up for us jewelry store owners,” she said. “There is an uptick as far as the amount of people coming in and people calling that is pretty common because people get all hyper about it and they decide if they should invest in should I take all my money out of my IRA and invest in gold?” 

Eisen says she and her team never share their opinions because the market is unpredictable.

“Gold is very interesting because we can reuse it” Eisen said. “There are very few things we can use.”