Gold (GC=F) continues to build on recent gains, holding above $1,600 an ounce as investors flock to the safe haven as a hedge against the risks from the coronavirus.

But Tim Horsburgh, investment strategist at Invesco, tells Yahoo Finance’s The First Trade that it’s not just virus fears that are driving investors into gold. He said the low interest rate environment is a second reason to buy gold, even at its current price.

“Gold is like a lot of these precious metals, commodities and negative yielding assets, you have to pay to store it. And as rates go further and further down, that becomes less of a trade-off for investors,” he said. “The interest rate environment makes gold more attractive.”

Citi (C) just raised its price target on gold to $2,000 an ounce within the next 24 months, with analysts writing that the precious metal will remain “resilient during ongoing risk market rallies but a better hedge during sell-offs and vol spikes.”

“Gold is a direct beneficiary of the low nominal and negative real yield environment,” the Citi analysts wrote.

The Federal Reserve continues to signal interest rates are likely to stay low for the rest of the year. China is reportedly considering a range of options to stimulate its economy, including allowing mergers and injecting billions in cash into its airline industry that’s been hit hard by the coronavirus outbreak.

With worries like that, Horsburgh says it’s no wonder why investors are hedging their bets.

“Stocks are at or near all time highs, but we have seen a lot of hedging action in the marketplace,” he told Yahoo Finance’s Brian Sozzi and Seana Smith.

“90% (of investors think) everything's fine, stocks are going to do well and that's what everyone's positioned for. But there is this 10% hedge out there,” he said.

“There could be tail risks that we're not seeing,” Horsburgh said. “New reported cases are going down. It seems like the virus is contained but I think you are seeing a lot of that hedging action along the sides just in case.”

Read more:

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