Gold futures hit their highest level on record Monday, as investors continued to fret over the state of the COVID-19 battered global economy and weakness in the U.S. dollar, and amid concerns over the sticking power of stock gains.
surged $40.30, or 2.1%, to $1,937.80 an ounce after trading as high as $1,941.90. That took it past the record most-active intraday level of $1,923.70 an ounce from Sept. 6, 2011.
On Friday, the contract climbed $7.50 to settle at $1,897.50 an ounce on Comex, after trading as high as $1,904.60. That action took out a most-active contract settlement record of $1,891.90 from Aug. 22, 2011, based on records going back to November 1984, according to Dow Jones Market Data.
Last week, prices rose 4.8%, the biggest weekly percentage climb since the week ended April 9 and some analysts say the never-before-seen level of $2,000 an ounce is within reach. U.S. stocks closed lower on Friday, with the heavy Nasdaq Composite
marking its first back-to-back decline since mid-May.
‘With concerns about further pandemic-related lockdowns, the U.S. dollar decline, real rates continuing to plummet, and rising U.S.-China tensions, it is the entire list of fundamental drivers to get us there getting delivered up in one package…’
“With concerns about further pandemic-related lockdowns, the U.S. dollar decline, real rates continuing to plummet, and rising U.S.-China tensions, it is the entire list of fundamental drivers to get us there getting delivered up in one package today,” said Stephen Innes, chief global markets strategist at AxiCorp, of that $2,000 level in a note to clients.
The ICE U.S. Dollar Index
slid 0.8% to $93.64, having lost 3.8% for the month so far.
“Given the slumping view toward U.S. economic prospects and ideas that Europe will open a significant macroeconomic edge over the U.S., it is not surprising to see the dollar forge yet another lower low for the move and, in turn, contribute to the upward extension in precious metals prices,” analysts at Zaner Metals wrote in a Monday note.
“Not surprisingly, investors also added to the bullish environment with news that Friday saw 1.76 million ounces purchased by gold [exchange-traded funds], with a more astonishing purchase of 9.1 million ounces of silver by silver ETFs,” they said.
The gold market “continues to get a tremendous amount of bullish press coverage and that is likely to embolden the bull camp further, and is likely to result in a an even wider cross section of small investors learning about precious metals ETFs for the first time,” the Zaner Metals analysts said.
In Monday dealings, the gold-backed SPDR Gold Trust
traded 2.1% higher.
“Another bullish force is a ratcheting up of expectations for U.S. central bank action, as soft U.S. data and the unending infection threat is starting to sink sentiment, and we suspect the [Federal Reserve] is now very keen to cushion against renewed shutdown fears,” analysts at Zaner Metals said.
The Federal Open Market Committee will make an announcement on monetary policy on Wednesday.
And in China, the U.S. says it has closed its consulate in Chengdu, a move ordered by Beijing after the closure of the Chinese consulate in Houston last week.
Virus outbreaks and the effect on global economies has also seen investors flocking to gold. While investors have been consumed by concerns about outbreaks across the southern U.S. states, Spain emerged as a fresh worry amid a resurgence of the virus, notably in the northeast region of Catalonia. The U.K. government put Spain back on a list of countries it deemed unsafe for travel and ordered travelers to isolate for 14 days upon return from the popular holiday destination.
“There has been a lot of talk about the $2K hurdle, which has been my long-term target too,” said Fawad Razaqzada, market analyst at ThinkMarkets, in a market update. “Obviously, there is no guarantee gold will get there or indeed stop there, but that target is only $55 away from the overnight high.”
Meanwhile, the September silver contract
climbed $1.66, or 7.3%, to $24.51 an ounce, on track to tally the highest most-active contract settlement since August 2013, according to FactSet data.
traded unchanged at $2.8925 a pound. October platinum
added 1.3% to $968.70 an ounce and September palladium
traded at $2,397.80 an ounce, up 4.5%.