Gold rose beyond the $1,800 per ounce target long eyed as a result of bulls on the commodity as concerns increase over the second wave of COVID-19 infections as well as increasing stimulus measures geared towards mitigating the economic effect of the pandemic. A number of analysts also predict that the safe-haven asset would attain record highs above $2,000 in the months to come as COVID-19 cases further increase. At 6:30 am today, the price stood at $1801.5.
U.S. gold futures on Comex had risen by $19.30, or 1.1%, at $1,800.50, after hitting an intraday high at $1,803.95. This was the highest reached by a benchmark Comex contract for gold since its all-time peak of $1,911.60 in September 2011. Spot gold also increased by $8.58, or 0.5% at $1,781.20, after a session high of $1,785.97. That was also the highest since its September 2011 record of $1,920.85.
Philip Streible, the chief market strategist at Blue Line Futures in Chicago noted, “I believe that with additional lockdowns happening globally that central banks will continue to support the market at any cost. This should result in the Fed’s balance sheet continuing to grow and in turn provide underlying support in the precious metals markets. Gold should continue to track higher with $1,900 by Labor Day, $2,000 by Thanksgiving.”
In the United States, around 40,000 new coronavirus cases are announced daily in the ongoing outbreak, and it is projected to grow to as much as 100,000 daily. Top U.S. pandemics expert, Anthony Fauci said that this could be the country’s fate without adequate social-distancing amongst other safety measures. Even worse is that some health officials believe that the cases could be as much as 10 times higher than the official count. China, India and New Zealand have also had higher caseloads lately.
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Another determinant of the increasing price of Gold, the U.S. Federal Reserve and Congress have also passed more than $3 trillion in stimulus to mitigate the negative impact of the pandemic on the economy.