Gold had a sizzling 2020, thanks to the flare-up in equity market volatility and the resultant safe-haven rally. The volatility ETN iPath Series B S&P 500 VIX Short-Term Futures ETN VXX has added 2.5% so far this year, while the largest gold ETF SPDR Gold Shares GLD is up 7.5%, thanks to the coronavirus scare.

The coronavirus impact seems to be more crucial than estimated. As a result, gold prices approached a 7-year high. Last week, gold touched $1600 for the first time since 2013. GLD added 3.3% last week as bullion made way for the biggest weekly gain in more than six months. Holdings in bullion-backed ETFs rose for 22 successive sessions last week, the longest-ever run, according to data compiled by Bloomberg.

Gold’s Near-Term Price Target

Citigroup analyst Aakash Doshi expects gold to top $2,000 an ounce over the next year or two, marking a roughly 22% rise from its current price of $1,645. Goldman expects gold to touch $1,850 if the virus threat lingers.

Let’s take a look at why gold could rule in 2020?

Coronavirus Outbreak & Return of Global Growth Worries

Trade war worries may have had subsided at the start of 2020 but fears of a global economic slowdown have returned, thanks mainly to the coronavirus outbreak. The International Monetary Fund (IMF) recently said that the virus will likely dent global growth by 0.1% and drag down China’s economic growth to 5.6%, which is 0.4% lower than IMF’s January outlook.

IMF had lowered the global growth forecast in January too. The organization warned that further severity of the virus contagion may worsen the global growth picture (read: Play These Dividend Growth ETFs to Combat Coronavirus).

Global Policy Easing, Negative Yielding Debt

Most developed (including the United States) and emerging economies have been on a policy easing mode.An easy monetary policy has been adopted by central banks of countries that form about 70% of global GDP. The pool of securities with a yield below zero jumped by $1.16 trillion at late-January.The World Gold Council points indicated that as much as 90% of developed market sovereign debt is trading with negative real rates.

The ECB and the BoJ have benchmark interest rates in the negative territory. The 10-year U.S. yield is near the low end of its five-year range and is “poised to break down”. Right now, real U.S. rates are negative, which cuts the opportunity cost of holding bullion, per Bloomberg. Gold in euros touched an all-time high last week. The Commonwealth Bank of Australia expects the Fed to slash rates twice in the second half of this year as virus fears loom large.