Rising pandemic boosts gold to record high
Surging infection rates are supporting the bullion and driving US dollar higher, strategist says
Bengaluru — Gold prices surged to a record high on Monday as fears over an economic fallout from rising Covid-19 cases boosted demand for the safe-haven metal, though gains were capped by an uptick in the US dollar.
Spot gold was steady at $1,973.94 per ounce by 4.54am, after hitting a record high of $1,984.66 in early Asian trade. US gold futures rose 0.3% to $1,992.30.
“The sentiment across markets is deteriorating. Rising infection rates are a real concern for the globe and a real support for gold prices. Given that, it is also driving US dollar higher,” said Michael McCarthy, chief strategist at CMC Markets.
Coronavirus cases continued to surge in the US and stood at more than 17.96-million globally.
Rising Covid-19 cases and simmering US-China tensions have dented hopes for a swift economic recovery, driving inflows into safe-haven assets such as gold, which has climbed 30% so far this year.
“Gold also saw safe-haven demand as the federal unemployment bonus expired on Friday, which would affect US consumer income and spending and the US Central Bank would thus remain dovish,” Phillip Futures analysts said in a note.
US legislators struggled to hammer out a new stimulus plan. White House chief of staff Mark Meadows said on Sunday he is not optimistic on a near-term deal for the coronavirus relief bill. Limiting gold’s advance, the dollar index rose 0.2%, having touched its lowest level since May 2018 in the last session.
A weaker dollar, also considered a rival safe haven, makes gold cheaper for holders of others currencies.
China’s factory activity expanded at the fastest pace in nearly a decade in July, a survey showed.
Speculators reduced their bullish positions in Comex gold and silver contracts in the week to July 28.
Elsewhere, silver eased 0.2% to $24.32 per ounce, platinum fell 0.9% to $899.04 and palladium dropped 1.1% to $2,068.29.
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