Gold holds near 1-month peak on second wave fears

Wednesday, 24 June 2020 00:00 -     - {{hitsCtrl.values.hits}}

A sales assistant displays a 1000 gram gold bar as an investment for a customer at Caibai Jewelry store, in Beijing, China – Reuters/File photo


Reuters: Gold prices on Tuesday held firm near a more than one-month peak scaled in the last session, as a rise in coronavirus infections fuelled concerns of a second wave of the pandemic.

Spot gold was up 0.1% to $1,756.70 per ounce at 1154 GMT. On Monday, bullion hit $1,762.84, its highest since 18 May. US gold futures were up 0.3% to $1,771.20 per ounce.

“Stimulus and fiscal spending are going to continue to go up because the virus hasn’t gone... we’re not out of the woods yet and that’s driving continuous demand for safe havens” especially with the liquidity from central banks starting to stoke inflation, Saxo Bank analyst Ole Hansen said.

Technically, he said a break above the $1,745-$1,765 range “would trigger a chase towards the $1,800 level”.

Global cases of the novel coronavirus surpassed nine million on Monday.

Gold has gained nearly 16% this year, hitting a 7-1/2 year peak of $1,764.55 last month, supported by global stimulus measures since the non-yielding metal is considered a hedge against inflation and currency debasement.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.58% to 1,166.04 tonnes on Monday, a level last seen in April 2013.

While the increase in infection is positive for gold, demand from the world’s second biggest bullion consumer India is likely to remain paralysed since the country is also seeing a spike in cases, Commerzbank said.

Also helping gold, the dollar edged 0.2% lower against a basket of currencies.

Gold’s gains came despite a rise in equities driven by data showing the downturn in the euro zone economy eased this month, and after US President Donald Trump tweeted the US-China trade pact was “fully intact”.

Elsewhere, palladium slipped 0.6% to $1,926.25 per ounce, platinum rose 0.4% to $824.97 per ounce and silver was steady at $17.82 per ounce.