Gold climbs to record high as traders turn for safety

Safe-haven gold scaled a record 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 hit a record high of $2,030.72 in early Asian trade around 2.34am GMT, but later dipped to $2,014.41, with the slight retreat attributed to profit-taking.

US gold futures rose 0.7% to $2,032.30.

“The drop in the dollar and nominal yields, as speculation remains rife about global growth and any US 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 US and dozens of US 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 the hope of a swift US economic rebound, sending the five-year treasury yield to a record low, reducing the opportunity cost of holding non-interest bearing gold.

The US dollar, considered an alternative safe-haven, 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.

Elsewhere, silver dropped 0.7% to $25.83/oz, platinum fell 0.9% to $929.60 and palladium slipped 1.5% to $2,107.38.


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