Gold surges on coronavirus fears

Gold bars in a storefront display at the Grand Bazaar in Istanbul. Photo by Joel Carillet.Gold bars in a storefront display at the Grand Bazaar in Istanbul. Photo by Joel Carillet.

Seven straight sessions of gains lifted the gold price to a fresh seven-year high, after renewed fears of the coronavirus sent investors scurrying to safe-haven assets.

The gold price touched a new intra-day high of US$1,652.10 on the Comex market in New York, up 2%, or US$32 per oz., from yesterday’s settlement, and the highest level since mid-February 2013.

By midday, trade already hit the highest volume for the year with more than 43 million oz. exchanging hands. Gold bullion is up more than US$120 since the start of 2020.

The yield on the U.S. 30-year bond fell below 1.9% on Friday, a record low, after business activity in the U.S. shrank for the first time in nearly seven years, due to the pandemic’s disruption of global supply chains and travel.

The IHS Markit purchasing managers’ index measuring composite output at factories and service providers fell below 50 for the first time since October 2013. Readings below 50 indicate contraction and usually predict broader economic slowdown.

“The persistent, cold-blooded and measured shift in gold higher, despite the U.S. dollar, is telling,” Nicky Shiels, metals strategist at Bank of Nova Scotia, said in an emailed message to Bloomberg News. “The breakout is warranted and has legs.”

Gold hit record highs in 10 major currencies including the euro, Australian and Canadian dollars, the Indian rupee and Brazilian real.

Ole Hansen, head of commodity strategy at Saxo Bank, said in a research note that gold is in a perfect storm of price supporting developments and, significantly, is reaching new highs, despite the strength in the U.S. dollar.

The normal negative correlation has broken down and this has led to some significant gains against most major currencies, said Hansen, adding that gold priced in dollars is the currency furthest away from hitting the US$1,921 per ounce record from 2011.

It is difficult to see what at this stage can halt or pause the rally, Hansen said.

According to Bloomberg calculations, holdings in physically-backed gold exchange-traded funds have climbed for 22 straight session, the longest unbroken run in the history of the industry.

— This article first appeared in our sister publication, MINING.com. 

Print

Be the first to comment on "Gold surges on coronavirus fears"

Leave a comment

Your email address will not be published.


*


By continuing to browse you agree to our use of cookies. To learn more, click more information

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.

Close