Senior refinery technician Vincente Sandoval puts a gold ‘button’ into a furnace to be further refined to form gold doré bars at Newmont Mining’s Carlin gold mine operation near Elko, Nevada, the US. File photo: REUTERS/RICK WILKING
Senior refinery technician Vincente Sandoval puts a gold ‘button’ into a furnace to be further refined to form gold doré bars at Newmont Mining’s Carlin gold mine operation near Elko, Nevada, the US. File photo: REUTERS/RICK WILKING

Bengaluru — Gold briefly breached $1,800 an ounce on Wednesday for the first time since 2011 as mounting fears over the fast global spread of the coronavirus sent investors scurrying for safe havens.

Spot gold had risen 0.3% to $1,799.22 an ounce by 8.54am GMT, after hitting its highest since November 2011, at $1,800.18, earlier in the session. US gold futures rose 0.2% to $1,812.90 an ounce. European shares opened lower as soaring Covid-19 cases dented hopes of a swift economic recovery.

“Investors are hedging their exposure to riskier assets simply because there’s a growing and widening belief that any recovery is unlikely to be V-shaped,” said Michael Hewson, chief market analyst at CMC Markets UK. “Markets generally tend to operate through a prism of optimism and that optimism is being tested at the moment and gold is benefiting from that.”

The US has exceeded 3-million infections, with about 1.3-million of them recovered, while cases also grow worldwide. Adding to the economic worries, US Fed officials expressed concern that the surge threatened to pinch consumer spending and job gains.

The European Commission also forecast the eurozone would drop deeper into recession this year. However, in the medium to longer term, an improvement in the economic backdrop could weigh on gold, Julius Bär analyst Carsten Menke said in a note, pointing out that safe-haven demand has been the strongest in countries hit the hardest, such as the US and the UK.

Mirroring appeal for the metal, prices of which have rallied more than 18% so far this year, gold-backed exchange-traded funds added 104 tonnes of bullion worth $5.6bn in June, the World Gold Council said on Tuesday.

“The health, financial and economic uncertainties generated by the Covid-19 pandemic and its aftermath are likely to continue to support gold’s rally well into 2021, but at a reduced level,” HSBC analysts said in a note.

Palladium fell 0.7% to $1,902.17 an ounce, platinum fell 0.6% to $830.21 an ounce and silver rose 0.5% to $18.38 an ounce.

Reuters

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