Graphic: Stunned by gold's record rise? There's more to come, analysts say

By Peter Hobson LONDON (Reuters) - The speed at which gold has broken above $2,000 an ounce has left some in the market fearing a correction, but many analysts predict more gains as the coronavirus crisis spurs investors to buy into bullion's relative safety. The record-breaking rally, which lifted gold as high as $2,055 on Wednesday, has made the precious metal one of 2020's best performing mainstream assets.

Reuters August 06, 2020 00:06:13 IST
Graphic: Stunned by gold's record rise? There's more to come, analysts say

Graphic Stunned by golds record rise Theres more to come analysts say

By Peter Hobson

LONDON (Reuters) - The speed at which gold has broken above $2,000 an ounce has left some in the market fearing a correction, but many analysts predict more gains as the coronavirus crisis spurs investors to buy into bullion's relative safety.

The record-breaking rally, which lifted gold as high as $2,055 on Wednesday, has made the precious metal one of 2020's best performing mainstream assets.

It has risen $500 this year, and $200 in the last two weeks alone.

Taking out the totemic $2,000 barrier means investors must change their reference points, said Frederic Panizzutti at Swiss precious metals dealers MKS.

"The adjustment will be higher. We are definitely in a bull run," he said.

Gold prices https://fingfx.thomsonreuters.com/gfx/ce/bdwvkeyzavm/2020%20GOLD.JPG

A hoarding spree has fuelled the rally, with investors adding 922 tonnes of gold worth $60 billion at current prices to their stockpiles in exchange-traded funds this year, according to the World Gold Council.

Investors see gold as an asset that should hold its value as the health crisis and money printing by central banks erode the value of others.

Gold ETF holdings https://fingfx.thomsonreuters.com/gfx/ce/qzjpqwmywpx/2000%20GOLD%20ETFS.JPG

Real returns on U.S. bonds - in normal times a much more popular perceived safe asset than gold - have tumbled to minus 1.07% from 0.15% at the start of the year, making bullion look like a better bet.

Gold and the dollar https://fingfx.thomsonreuters.com/gfx/ce/yxmpjrynnpr/2020%20GOLD%20DOLLAR.JPG

The dollar, another safe-haven rival to gold and the currency in which it is priced, has slid to 2-year lows as the novel coronavirus infects more Americans. <.DXY>

Gold and U.S. real yields https://fingfx.thomsonreuters.com/gfx/ce/nmopaloqdva/2020%20GOLD%20YIELDS.JPG

With central banks keeping interest rates low and pumping money into markets, even an economic rebound -- which would typically see money move from bullion to more productive assets -- would help gold, said Commerzbank analyst Carsten Fritsch.

That is because rising inflation expectations would push the real returns on bonds even lower.

"Ultimately with gold you can't print any more of it, you can't artificially create it. It will hold its value," said Michael Hewson at CMC Markets.

Gold technicals https://fingfx.thomsonreuters.com/gfx/ce/yzdpxngxjpx/2020%20GOLD%20TECHNICALS.JPG

Bank of America says prices could hit $3,000 within 18 months.

Not everyone is convinced. Demand for gold in Asia has collapsed due to lockdowns and high prices, and the rally looks overextended to many, at the very least in the short term.

"This is a market to short, not to chase higher," said Gianclaudio Torlizzi at traders T-Commodity, adding that prices could - probably after a correction - rise to $2,300 but were unlikely to go further.

"The insurance gold provides to an investor's portfolio has become very expensive," said Julius Baer analyst Carsten Menke.

(Reporting by Peter Hobson; Additional reporting by Eileen Soreng; Editing by Veronica Brown and Emelia Sithole-Matarise)

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

Updated Date:

TAGS:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Serbian leader fires back at Moscow after 'Basic Instinct' jibe
World

Serbian leader fires back at Moscow after 'Basic Instinct' jibe

MOSCOW/BELGRADE (Reuters) - Serbia's president accused Moscow on Sunday of stooping to "primitivism and vulgarity" in an attack on him, after Russia's foreign ministry spokeswoman compared him to the actor Sharon Stone in an explicit film scene. Serbia is Moscow's closest ally in the Balkans, but President Aleksandar Vucic has long annoyed Russia by seeking better ties with the West

Turkey's Erdogan, EU's Michel discuss East Med - CNN Turk
World

Turkey's Erdogan, EU's Michel discuss East Med - CNN Turk

ISTANBUL (Reuters) - Turkish President Tayyip Erdogan and European Council President Charles Michel discussed developments in the Eastern Mediterranean on Sunday, CNN Turk reported. NATO allies Turkey and Greece have been locked in a row over hydrocarbon exploration in the sea's disputed waters and the extent of their continental shelves. There was no official confirmation of the talks.

Jump in COVID-19 cases in Britain is 'concerning' - Hancock
World

Jump in COVID-19 cases in Britain is 'concerning' - Hancock

LONDON (Reuters) - The sharp rise in COVID-19 cases in Britain of 2,988 recorded on Sunday, the highest jump since May, was "concerning", Health Secretary Matt Hancock said, although he added that the majority were younger people. "The rise in the number of cases that we've seen today is concerning," he said. "The cases are predominately among younger people, but we've seen in other countries across the world and in Europe this sort of rise in the cases amongst younger people leading to a rise across the population as a whole." He said everybody had to follow social distancing rules to prevent the spread of infections.