Gold eyes $2,000 mark in speedy record-breaking run

By Arpan Varghese and Peter Hobson LONDON/BENGALURU (Reuters) - Gold's record rally is moving tantalisingly close to the psychologically key $2,000 level, powered by investors seeking cover from COVID-19's global economic toll, as reflected in dollar weakness, faltering stocks and U.S.-China trade tensions. Spot gold prices have surged 53% in the last 14 months, blowing past 2011's record high of $1,920.30 an ounce to an all-time peak of $1,943 earlier on Monday. Analysts said the slide in the rival safe-haven dollar was the tipping point for gold's latest surge, with the greenback plunging to a two-year low.

Reuters July 28, 2020 00:08:25 IST
Gold eyes $2,000 mark in speedy record-breaking run

Gold eyes 2000 mark in speedy recordbreaking run

By Arpan Varghese and Peter Hobson

LONDON/BENGALURU (Reuters) - Gold's record rally is moving tantalisingly close to the psychologically key $2,000 level, powered by investors seeking cover from COVID-19 's global economic toll, as reflected in dollar weakness, faltering stocks and U.S.-China trade tensions.

Spot gold prices have surged 53% in the last 14 months, blowing past 2011's record high of $1,920.30 an ounce to an all-time peak of $1,943 earlier on Monday.

Analysts said the slide in the rival safe-haven dollar was the tipping point for gold's latest surge, with the greenback plunging to a two-year low.

"To some degree, gold replaces the USD," said Hans Ritter, global head of trading at Heraeus.

Gold soars, dollar dips https://fingfx.thomsonreuters.com/gfx/mkt/jbyvrkrzlpe/Gold%20all-time%20high.png

Fuelling bullion's upward path has been economic and political uncertainty stemming from the coronavirus pandemic and the response by central banks -- to slash interest rates and flood markets with cash.

This has fuelled fears of inflation, which would typically devalue other assets, and has also lowered returns on government bonds, making gold more attractive.

Gold's rise has also been mirrored by a slide in real yields on 10-year U.S. bonds, which are at record lows.

"When we think about the gold market what we're really thinking about is what happens with real U.S. yields," said Capital Economics analyst Kieran Clancy, adding inflation expectations were likely to rise as the global economy rebounds, pushing real yields even lower and gold higher.

"That means risk assets and gold go up together, which sounds crazy but makes sense" and that momentum is likely to change only when central banks begin to consider raising nominal interest rates.

Gold versus real rates https://fingfx.thomsonreuters.com/gfx/mkt/rlgvdnlrnvo/Gold%20vs%20real%20yields.png

Gold ETF holdings https://fingfx.thomsonreuters.com/gfx/ce/qmyvmkgjrvr/GOLD%20RECORD%20ETF.JPG

Financial investors, mainly in Europe and the United States, have been on an unprecedented buying spree, with gold-backed exchange-traded funds having added a record 734 tonnes worth $39.5 billion to their stockpiles in first half of 2020, according to the World Gold Council.

This has offset a collapse in retail gold demand in major consumers China and India.

While analysts believed the rally was on solid ground, they were mindful of corrections given its pace.

"The speed of the upswing should sound a warning bell ... as this can often precede a fall," Commerzbank analyst Carsten Fritsch said in a note.

(Reporting by Arpan Varghese in Bengaluru, Peter Hobson in London; additional reporting by K Sathya Narayanan; Editing by Veronica Brown and David Evans)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

Greek police clash with protesters in rally against mandatory vaccinations
World

Greek police clash with protesters in rally against mandatory vaccinations

ATHENS (Reuters) - Greek police used teargas and water cannon to disperse people who had gathered in central Athens on Saturday to protest against mandatory COVID-19 vaccinations. More than 4,000 people rallied outside the Greek parliament for a third time this month to oppose mandatory inoculations for some workers, such as healthcare and nursing staff.

Two Turkish soldiers killed in attack in northern Syria
World

Two Turkish soldiers killed in attack in northern Syria

ISTANBUL (Reuters) - Two Turkish soldiers were killed and two were wounded in an attack on their armoured vehicle in northern Syria, and Turkish forces immediately launched retaliatory fire, Turkey's defence ministry said on Saturday. "Our punitive fire against terrorist positions is continuing," the statement on Twitter on said. It did not specify where the attack occurred, but media reports said it was in the al-Bab area.

Brazilians take to streets again to demand Bolsonaro's impeachment
World

Brazilians take to streets again to demand Bolsonaro's impeachment

By Marcelo Rochabrun SAO PAULO (Reuters) - Protesters took to the streets in several Brazilian cities on Saturday to demand the impeachment of far-right President Jair Bolsonaro, whose popularity has fallen in recent weeks amid corruption scandals against the backdrop of the pandemic. This week, news broke that Brazil's defense ministry told congressional leadership that next year's elections would not take place without amending the country's electronic voting system to include a paper trail of each vote. Bolsonaro has suggested several times without evidence that the current system is prone to fraud, allegations that Brazil's government has denied