Gold futures surged on Monday morning at London’s trading session, reaching its highest point at $1,775 since May 2020 before trading presently at $1,761 at the time this report was written.
This came as a result of the increasing number of COVID-19 cases across the world, making investors even more pessimistic about the possibility of quick economic recovery.
The World Health Organization (WHO) reported a record of 183,020 cases yesterday, Sunday, with about 9 million global cases as of June 22, according to data from Johns Hopkins University.
Michael McCarthy, the chief strategist at CMC Markets, explained that “General risk aversion is helping the market. We are seeing pressure on growth exposed currencies and on share markets. Overall, there are concerns about increasing infection rates…the market is concerned about the outlook for growth and that, of course, is supportive for gold.”
Gold futures kept the momentum up as more investors turned to the safe-haven asset after witnessing the surge in cases of the COVID-19 pandemic over the weekend. Announcements by two U.S. Federal Reserve officials that the U.S. could have an even high unemployment rate if the virus is not curtailed now, expectedly dampened investor sentiment.
Hong Kong National Security Law developments also played a part in the rush to Gold. China had released details yesterday, Saturday, about its planned national security laws which are to be enacted in Hong Kong and Macau. They had done this with clear details that reveal that Beijing will have the powers to enforce all laws. Note that Gold is perceived as a safe store of value during times of political and financial uncertainty.