Gold hits record high as dollar takes a hit from rising US-China row
Gold prices jumped to record highs on Monday as an intensifying US-China row hammered the dollar and cemented expectations that central banks would continue pumping out stimulus to ease the economic pain from a worsening coronavirus pandemic.
Spot gold had risen 1.5% to $1,928.83 per ounce by 5.06am after hitting an all-time high of $1,933.30. US gold futures climbed 1.4% to $1,924.20.
Silver too joined the rally, jumping 4.5% to its highest since September 2013 at $23.86 per ounce.
With the dollar substantially weaker, “a lot of funds are moving into gold right now”, said Edward Meir, analyst at ED&F Man Capital Markets.
And as long as the [virus situation] gets worse, the market is discounting more stimulus for a longer period and in bigger quantities, and all of that is bullish for gold
“And as long as the [virus situation] gets worse, the market is discounting more stimulus for a longer period and in bigger quantities, and all of that is bullish for gold,” he added.
The dollar fell to a near two-year low vs major currencies as a standoff between Washington and Beijing showed no signs of abating with both sides ordering the closure of consulates in Chengdu and Houston.
The Covid-19 outbreak also continued to worsen, with more than 16.13-million cases globally and 644,836 deaths, driving expectations of more stimulus globally to ease the economic blow.
Gold tends to benefit from widespread stimulus as it is considered a hedge against inflation and currency debasement.
The White House and Senate Republicans have reached “an agreement in principle” on the next coronavirus relief bill, a White House official said on Sunday.
Gold’s record run may gain further momentum on technical buying and as stop losses are taken out, said Jeffrey Halley, a senior market analyst at Oanda, adding “the move to $2,000 an ounce will happen much more quickly than the move from $1,800-$1,920.”
Elsewhere, platinum rose 1.4% to $926.58 and palladium climbed 0.5% to $2,230.16. — Reuters
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