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Gold hit record prices as concerns over issues such as the coronavirus pandemic and tensions between the United States and China weighed on investor sentiment.
On Asian trading hours morning on Monday, spot gold traded at around $ 1,931.11 per ounce after a previous trade of up to $ 1,943.9275 per ounce. Those levels overshadowed the previous record price set in September 2011.
Gold futures also rose 1.54% to $ 1,926.70.
In a note circulating before the new highs, Vivek Dhar of the Commonwealth Bank of Australia said the fall in real 10-year yields in the United States has been the “most important driver” among other factors, such as the weakening of the demand for the US dollar and safe haven. .
The yield on the benchmark 10-year Treasury bond was last placed at 0.5856%. Against a basket of its peers, the US dollar was at 93,906. The Japanese yen was trading at 105.60 against the dollar after strengthening strongly at the end of last week from levels above 106.40 per dollar.
“The negative relationship between real US yields in the long term and gold futures has held up quite well in the long term. This is because when real US yields increase. In the long term, the Gold is less attractive relative to US interest-bearing securities since gold does not generate revenue capacity, “said Dhar, the company’s mining and energy commodity analyst. “The drop in US 10-year real yields is primarily due to an increase in US 10-year inflation expectations.”
Johan Jooste of The Global CIO Office told CNBC’s “Street Signs Asia” on Monday that “the opportunity cost of having gold is practically zero” with Treasury yields at their current low levels. Still, he added that there is a “horrible feeling to haunt him shortly after the fact” if investors enter the gold market now.
“We said to buy in sauces, but … it is a difficult thing to do now because … something has probably been lost,” said Jooste, who is the company’s chief investment officer.
Movements in precious metal prices came as tensions have escalated between Washington and Beijing. China announced on Friday that it ordered the United States to close its consulate in Chengdu, after the United States demanded the closure of the Chinese consulate in Houston.
Before that, Secretary of State Mike Pompeo also criticized China in a speech on Thursday. He said Washington will no longer tolerate Beijing’s attempts to usurp global order.
Meanwhile, the number of coronavirus cases worldwide continues to rise. More than 16 million people worldwide have been infected with the coronavirus, and the United States accounts for about a quarter of that number, according to data compiled by Johns Hopkins University.
– CNBC’s Weizhen Tan contributed to this report.
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