August 05, 2020
Gold extends record rally on softer dollar, stimulus bets
(Reuters) - Safe-haven gold scaled an all-time peak on Wednesday, extending a record run above the $2,000 mark on a weaker dollar and bets for more stimulus measures to revive a pandemic-ravaged economy.
Spot gold was up 0.2% at $2,022.19 per ounce after hitting a record high of $2,030.72 in early Asian trade. U.S. gold futures rose 0.9% to $2,039.40.
“The drop in the dollar and nominal yields, as speculation remains rife about global growth and any U.S. fiscal package, is what fundamentally drove gold prices higher,” said IG Markets analyst Kyle Rodda.
“The outlook remains very strong for gold. Interestingly, we’ve seen traders reduce their long exposure to gold throughout this recent rally, suggesting new buyers could still come back into the market to push prices higher,” he said.
Coronavirus cases continue to surge in the United States and dozens of U.S. states have had to pause or roll back their reopening plans. The global tally stood at more than 18.41 million.
The rapid rise in cases has dented hopes of a swift U.S. economic rebound, sending the five-year Treasury yield to a record low, reducing the opportunity cost of holding non-interest bearing gold.
The U.S. dollar fell 0.3% against its rivals, making gold cheaper for holders of other currencies.
White House negotiators vowed to work “around the clock” with congressional Democrats to try to reach a deal on coronavirus relief by the end of this week.
“Despite of potential short-term pullback, the mid-to-long-term prospect of gold and other precious metals remains bullish against the backdrop of low interest rate environment and fiscal + monetary stimulus,” said DailyFx strategist Margaret Yang.
Spot gold may complete its current correction above a support at $2,000 and retest a resistance at $2,028 per ounce, said Reuters technical analyst Wang Tao.
Elsewhere, silver eased 0.2% to $25.95 per ounce, platinum rose 0.1% to $938.16 and palladium slipped 0.8% to $2,122.74.