Many investors have been looking to the gold sector as a haven amid economic volatility created by the COVID-19 pandemic, and executives in the space hope to leverage the interest and boost their companies' appeal to a more general audience.

While the price of gold has buckled more recently as the U.S. dollar strengthened, it did so after months of gains and record-setting prices. During the virtual Gold Forum Americas conference Sept. 20-23, company executives, analysts and other market observers expressed optimism that the asset would increasingly play a role in investors' portfolios.

"Investors are just starting to wake up and smell the coffee," Frank Giustra said during an event for the conference. "It's almost a perfect storm in favor of gold right now." Giustra is a Canadian billionaire and philanthropist behind the financing of multiple mining projects and also founded Lionsgate Entertainment.

Investment demand for gold will likely remain strong, according to John Reade, chief market strategist and head of research at the World Gold Council. Gold prices hit new highs and crossed the US$2,000-per-ounce mark in early August, subsequently retreating to closer to US$1,900/oz as the U.S. dollar strengthened. In a recent precious metals update, Capital Economics forecast the price of gold would tick up to between US$2,000 and US$2,100 by the end of 2021.

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.

Reade said he expects the global economy to recover from the early stages of the pandemic. He also flagged long-term economic consequences, many of which will likely favor gold investment, he said.

"Countries' budget deficits will translate into higher debt burdens, and interest rates will stay low for a long time," Reade said. "If inflation picks up, central banks will be loath to hike rates and will probably want longer-term bond yields to remain low."

GoGold Resources Inc. President and CEO Bradley Langille and other gold executives told S&P Global Market Intelligence that they are seeing more generalist investors getting involved in the gold sector. Maurice Mason, vice president of corporate development and investor relations for Caledonia Mining Corp. PLC, also said he is seeing new interest in the space.

Some of those investors are coming through new platforms that will require companies to tweak their approach. Frank Holmes, CEO and chief investment officer of investment management firm U.S. Global Investors Inc., encouraged those attending the event to reach out on podcasts, YouTube videos and other mediums.

"Any CEO or CFO doing interviews and that have the opportunity to do these interviews, I highly urge you to make the time because this is the new audience of investors that are very keen to look at your company," Holmes said.

During the conference, several speakers referenced Warren Buffett's recent venture into the gold sector despite previously advising against it. Buffett's Berkshire Hathaway Inc. took up a US$563.6 million stake in Barrick Gold Corp. in mid-August.

Broader economic woes to drive gold value

While much of the economy has suffered under COVID-19 impacts, gold has benefited as investors have flocked to an asset traditionally known as a haven.

Peter Marrone, executive chairman of Yamana Gold Inc., said during a presentation that many of the factors positively impacting gold prices would have occurred independently of a pandemic.

Marrone also noted that the global health crisis has led to a high level of fiscal and monetary stimulus from governments worldwide. "This is not only almost without precedent; such stimulus is like a drug," Marrone said. "Once on it, it is almost impossible to get off of it. Stimulus will continue to increase and debt will continue to climb." This will increase the risk of stagnant growth, with pockets of potential severe inflation, while driving "sustainably higher gold prices," Marrone said.

"Over time, the United States dollar is going lower, yields will remain low, inflation uncertainty will persist and gold prices will go higher," he said. "I'm not showcasing doom and gloom. Instead, my aim is to underscore the importance of gold exposure in one's portfolio, and preferably an overweight allocation."

By investing in gold companies rather than directly in the commodity itself, investors can score dividends for taking on some operational risk. "We are on the front end of what could be an explosive value proposition," Marrone said. "Gold companies need to distinguish themselves. One way to do that is with a robust and sustainable dividend."

During the forum, the chief officers of two gold mining giants, Barrick and Newmont Corp., touted their companies' dividend and shareholder buyback programs aimed at enticing investors.

Investor interest belies demand concern

While many gold watchers have been expressing optimism, some also pointed to a few troubling underlying market conditions.

"Not all is well in gold demand," said Shayne McGuire, portfolio manager of Emerging Markets and Gold Fund for Teacher Retirement System of Texas. "The move higher in gold prices has come from investors, while physical demand has been quite subdued."

Reade noted that global gold bar and coin demand fell 32% in the first half of the year compared to the prior year as demand from emerging markets, particularly China and India, was struck by the COVID-19 pandemic.

"The collapsing consumer demand for gold has escaped most people's attention," Reade said. Jewelry demand alone slumped 46% year over year in the first half of 2020, which is a greater decline than what was seen during the last global financial crisis, he added.

"There are early signs of sequential recovery in most markets, but 2020 will be a weak year for jewelry demand, irrespective of how quickly gold demand recovers from here," Reade said.

He also noted that demand from the technology sector, typically accounting for about 7% of gold demand, fell 13% in the first half of 2020. Central banks, which had been buying up gold, also recently slowed their pace.