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As the world economy faces a downturn caused by the coronavirus, U.S. traders have scrambled for gold, seen as a safer store of value by many, to cut their losses, according to The Wall Street Journal.

This year, gold prices have increased by 15% and risen 1.3% Thursday to $1,745.30 per troy ounce.

In fears of a breakdown in gold supply chains caused by the pandemic, nearly three quarters of 29.7 million troy ounces of gold have been delivered to New York in the last three months.

The unprecedented move, alongside the shrinking demand from China and India, has altered the global gold market.

Allan Finn, a commodities director at the gold transportation company Malca-Amit, said that “gold has reached America from all over the world. The flows into New York are unprecedented.”

However, few commercial airplanes and soaring demand for medical products have made such logistics firms’ job more difficult.

Investors, banks, and miners buy and sell gold futures in New York’s Comex while purchasing physical bullion in the U.K. They deliver gold from Europe to New York if prices in the two markets were to diverge.

The lockdown measures across U.S. and Europe, however, have restricted this self-correcting mechanism and driven the premium of New York gold to $70 an ounce in early April.

To restrain the mark-to-market losses, banks have flown gold to New York to deliver against futures they had sold to consumers. “It was the only way you could say economically, ‘I’ve closed this position,’” said Tai Wong, head of base and precious-metal derivatives trading at BMO Capital Markets.

Banks have also expected that the gold delivery to New York could narrow the price gap in London and New York and thus stem the losses.

The gap remained high at $6.15 per ounce Thursday.

Because London and New York demand different sizes of gold bar, traders first fly gold to refineries, recasting bullion to be eligible for sale on the exchange.

A managing director of refining and trading company MKS PAMP Group in Dubai, Frederic Panizzutti said that “the flow of gold from the East to the West has been to levels no one has seen in the past.”

Adrian Ash, director of research at BullionVault, projected that New York’s position in the global gold market might be threatened in the long term. “That would suggest that the market is longer-term going to say: If I’ve got London and Zurich metal to hedge, I’m going to hedge it in London and Zurich,” he said.

The main benchmark for U.S. crude oil prices also fell 3.8% Thursday to $38.09 a barrel. Federal Reserve Chairman Jerome Powell warned that economic recovery may take “some years”, crippling the recovery in energy demand.

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