Gold hit its highest level in more than seven years since concerns have grown that the Coronavirus pandemic will have a devastating effect on the global economy. While the crisis is hammering corporate earnings, it is a supercharging demand for gold.
The Coronavirus outbreak shifted the economies into recession. It pushed central banks to launch massive stimulus campaigns. Last month, equities sank, getting caught up in a wave of forced selling. Gold has staged a robust recovery. After trading $1,400 less than four weeks ago, the precious metal futures are nearing $1,800 an ounce this week.
Margaret Yang, an analyst at CMC Markets Singapore Pte, said in a note that risk sentiment is turning toward the careful side. Investors are escaping into the haven given the virus situation and extensive money-printing activities.
Banks have boosted price targets for gold, making the case that a more relaxed monetary policy and lower real interest rates will help gains.
Gold futures climbed as much as 1.3% to $1,785 an ounce on the Comex and traded at $1,779.30 in Singapore. Spot gold was $1,720.78 an ounce.
Gold shares in ETFs Surged to a record level
ETFs expanded to a record of growing demand, with investors looking for extra portfolio protection. Gold shares in SPDR, the largest exchange-traded fund, climbed above 1,000 tons and hit its highest point since mid-2013.
Gold soared even if countries started trying to ease the lockdowns since the pace of the Coronavirus spread has slowed in some economies. The US president, Donald Trump, declared he has total authority to order the states to ease social distancing and reopen their economies.
Gold bulls are possessing the definite near-term technical advantage to continue to suggest more upside for the precious metal in the near term. Haven demand boosts gold and silver since the global economy is still unstable.
The US seems to be the most affected by the Coronavirus outbreak. Cuomo, New York Governor, said that his state had seen the worst of the epidemic. The health officials of the country report that the US economy will very likely be able to reopen in May.
There is uncertainty when the global economies will be fully operational.
China’s March exports were down 6.6% compared to last year. Imports dropped by 0.9%.
Nymex crude oil prices traded solidly lower, around $21.00 a barrel. The new agreement between OPEC and other producers to reduce the commodity output did not boost the crude futures prices.
Meanwhile, the US dollar traded lower, at around 0.735% today.
Analysts speculate that gold features have the firm at a near-term technical advantage overall. The next short-term price breakout objective for gold is to produce a resistance at $1,800.00.
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