That's due to a couple of different things. A lot of people were writing GC contracts w/o actually having physical gold to cover. When some buyers of those same futures contracts wanted to take delivery, those contract writers who took the short position had to now go into the open market and buy gold. However, because of COVID-19, there is very little supply of gold as it is now. A lot of mining companies have no intention of continuing to mine, as they can just give their miners time off and sit on their gold reserves, wait til the price spikes, and start selling their inventory at a 25% markup. That's my theory anyway.

I read this last week (forgot where I read it) and haven't been able to find data to support what I read so take the following with a grain of salt.

Many investors owned gold as a hedge. The market's downturn happened so rapidly and violently, their other positions took a massive beating. That divergence happened because big players needed to get out of their gold position to cover margin for their other positions.

Some insights and speculations about the current issues with the market makers in charge on various flavours of paper gold: https://www.bullionstar.com/blogs/ronan-manly/bullion-bank-n...

No, there's often a disconnect between paper and physical metals when there's economic volatility. The same thing happened in '08. The reality is that trading futures contracts (which generally settle in cash) isn't the same as trading the physical metals (where you have broker fees to contend with.) While the physical metals markets are based on the spot price, the discount/premium goes way up during periods of high volatility.

the day before all non essential store (precious metal brokers) closed here I went to two and the asking price for silver was double the online spot for physical 1 ounce coins (not a high grade collectors coin just silver rounds)

Shelter in place orders likely caused a chunk of that.