July 21, 2020
Gold near nine year high as virus fears support safe haven demand
(Reuters) - Gold rose on Tuesday, hovering near a nine-year peak hit in the last session, as worries over a spike in COVID-19 cases and expectations for inflation from more economic stimulus measures boosted demand for the safe-haven metal.
Spot gold was up 0.1% at $1,817.23 per ounce, after hitting its highest since September 2011 at $1,820.06 on Monday. U.S. gold futures were little changed at $1,817.80.
“What’s really driving gold market is stimulus and we are going to get more of it. Its the eye candy that’s driving sentiment right now,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.
European Union leaders appeared to near an agreement on Monday on a 750-billion-euro stimulus plan for regional economies hit by the pandemic.
Adding to hopes for more economic stimulus, congressional Republicans announced plans to seek another $1 trillion in coronavirus economic relief.
Gold tends to benefit from widespread stimulus measures from central banks as these typically stoke inflation and the metal is widely viewed as a hedge against rising prices and currency debasement.
Rising coronavirus cases in the United States and elsewhere have intensified fears over global economic recovery, driving flows into safe-haven assets.
Indicative of sentiment, holdings of SPDR Gold Trust rose 0.4% to 1,211.86 tonnes on Monday.
Further helping gold, the dollar index fell to a more than four-month low against a basket of major currencies.
Silver also gained 0.2% to $19.95, its highest level since September 2016.
“Silver is starting to outperform gold here. On the one hand, it’s obviously appreciating on the basis of increased appeal for precious metals,” IG Markets analyst Kyle Rodda said.
“On top of that, there’s likely to be an element of silver catching a bit on a rebound in global industrial activity.”
Palladium was steady at $2,055.35 per ounce, while platinum fell 0.3% to $841.57.