Gold price surges to 7.5-year high as coronavirus concerns mount
The precious metal reached $1,760 an ounce
Gold prices rallied to a more than 7.5-year high on Monday as investors continued to buy the precious metal amid concerns over the strength of the economic recovery and that unprecedented stimulus would lead to inflation down the road.
FOREIGN INVESTORS TO BE BIGGEST BUYERS OF US STOCKS: GOLDMAN SACHS
Spot gold traded up 0.81 percent at $1,760 an ounce and was on track for its highest close since October 11, 2012. The precious metal has gained 15.83 percent this year.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GLD | SPDR GOLD SHARES TRUST - USD ACC | 246.66 | +2.04 | +0.83% |
With worries over North Korea, trade with China and the U.S. election, buyers are keeping “gold on the buy list,” wrote George Gero, managing director at RBC Global Wealth Management and a member of the COMEX board of directors. He pointed to continued buying of exchange-traded funds and the reopening of malls and New York City’s Diamond District.
Gold has surged this year as investors have sought safety in the precious metal amid the economic fallout caused by the COVID-19 pandemic. Stay-at-home orders aimed at slowing the spread of the virus forced nonessential businesses to close their doors, leading to the sharpest economic contraction of the postwar era and unprecedented support from policymakers.
NEW CORONAVIRUS SPIKE SHORT-CIRCUITS STOCK MARKET REBOUND
In response to the economic slowdown, the Federal Reserve cut rates to near zero, embarked on open-ended asset purchases and introduced lending programs to support the flow of credit to small businesses and households.
The U.S. Congress, for its part, in March passed the $2.2 trillion CARES Act which extended $1,200 checks to most Americans, in addition to providing relief for health care providers and businesses.
Those policy actions are likely to support the precious metal, according to the Commodities Research team at Goldman Sachs, which last week raised its 12-month price target to $2,000 an ounce.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
“Gold investment demand tends to grow into the early stage of the economic recovery, driven by continued debasement concerns and lower real rates,” wrote a Goldman Sachs team led by vice president Mikhail Sprogis.
Goldman isn’t alone in suggesting gold could top its previous all-time high of $1,888.70 that was reached on Aug. 22, 2011.
Since April, the precious metal has been testing key overhead resistance near $1,750, said Matt Maley, Boston-based chief market strategist at Miller Tabak & Co.
CLICK HERE TO READ MORE ON FOX BUSINESS
“Any meaningful break above $1,750 should give gold the kind of boost that will take back towards its all-time highs from 2011 very quickly,” he wrote.