July 22, 2020
Gold firms near nine year peak on weaker dollar, stimulus bets
(Reuters) - Gold jumped more than 1% on Wednesday to its highest in nearly nine years, driven by a weaker dollar and as expectations of more stimulus to revive pandemic-hit economies lifted the metal's appeal as an inflation-hedge.
Spot gold was up 0.8% at $1,856.13 per ounce, after hitting its highest since September 2011 at $1,865.35 earlier in the session. U.S. gold futures rose 0.7% to $1,856.80.
"The spectre of these stimulus packages has pushed investors back into non-yielding assets like gold," said ANZ analyst Daniel Hynes.
"The likelihood of interest rates remaining low for the foreseeable future and the weaker U.S. dollar have really boosted investor appetite."
European Union leaders on Tuesday sealed a 750 billion euro recovery plan, while White House officials and top congressional Democrats discussed another round of relief that would include extended unemployment insurance and more money for schools.
Helping bullion's rally, the dollar index held near a more than four-month low.
Coronavirus cases continued to surge in the United States, with President Donald Trump warning the virus would probably get worse before it gets better.
Underscoring the pandemic's impact, Japan's factory activity contracted for a 15th straight month in July.
Central banks have slashed interest rates and rolled out a wave of stimulus measures to cushion the economic damage from the pandemic, helping gold prices surge over 22% so far this year.
Silver continued to strengthen, rising 4.7% to $22.33 per ounce, its highest since October 2013.
"Silver spot prices have outperformed gold so far this month, an interesting reversal of the norm," said Cailin Birch, global economist at The EIU, adding that it reflected market optimism for global industry, as silver has many industrial uses.
"Overall, we expect demand for safe-haven assets like gold and silver to remain relatively strong for the remainder of 2020."
Palladium fell 1.1% to $2,133.32 and platinum lost 0.7% to $875.49.