Gold futures prices soared to nine-year highs at London’s trading session on Wednesday morning, rising to points not touched since September 2011. The prices were up by 0.70% to $1,856.60 by 5.16 GMT.
Gold traders and global investors are trooping in droves to safe haven hard assets like precious metals over growing concerns that the number of COVID-19 caseloads and deaths in major global economies continues to soar high, coupled with U.S Congress’ plan for a new stimulus bill after the current one ends by the end of July 2020.
Quick Fact: It’s key to note that the precious metal typically moves in the opposite direction from global stock markets, especially the American and European stock markets. Humans are emotionally and physically drawn to gold. It provides a significant store of value. Global Investors buy gold mainly to hedge against inflation.
READ: Gold maintains key support level as investors adopt a wait-and-see attitude
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, explained the macros making the yellow metal price reaching record highs. He said:
“I am not sure why we gapped at the Comex night session open other than to suggest some sniper wanted to run some topside stops in low liquidity conditions as there were no clear headlines to support the move.
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“Gold hit 9-year high on fiscal stimulus, COVID-19 count, and a falling US dollar. The uptrend is firmly entrenched so the rally can continue.
“Gold markets continue to receive its jet fuel from two critical ingredients: government debt and central bank liquidity.”