Gold price hits 8-year peak on mounting virus concerns, but then backs off on profit taking
London (July 1) Spot gold hit its highest since early October 2012 at $1,788.96 in early trade, and was little changed at $1,779.95 per ounce by 1205 GMT. U.S. gold futures fell 0.4% to $1,794.00 per ounce. "Uncertainty about the coronavirus, particularly in the U.S., which could put the brakes on an economic recovery, and the ultra-loose monetary policy of central banks are giving support to gold," said Commerzbank analyst Daniel Briesemann. A rise in negative-yielding global bonds was also adding to the metal's appeal, he said. Lower bond yields reduce the opportunity cost of holding non-interest bearing gold. But with investment demand likely to be higher than jewellery consumption this year, especially with practically no physical demand in Asia, gold's price gains are "somewhat fragile", he added. The United States recorded its biggest one-day spike in COVID-19 cases since the start of the pandemic on Tuesday, with the government's top infectious disease expert warning that infections could double.
However, keeping a lid on gold's gains, the U.S. dollar steadied close to a near one-month high. A stronger dollar makes holding gold more expensive for other currency holders. Reflecting high investor demand, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust , increased by 211.9 tonnes, or nearly 22%, in the second quarter. "Technically the situation remains firmly bullish with investors betting on further (money) printing activity from central banks," said ActivTrades chief analyst Carlo Alberto De Casa. CME Group said it would expand delivery options for its new gold contract to include vaults in London as well as in New York after disruption to supply routes caused havoc in gold markets earlier this year. Palladium was down 0.6% at $1,918.24 per ounce, while platinum fell 0.4%, to $813.14 per ounce and silver rose 0.3% to $18.19 per ounce.
By 08:30am EST spot gold slid $11 from morning high to $1,778, while spot silver dropped from morning high to $18.26.
Reuters
