The price of gold hit a record high, hitting $ 1,943 an ounce, as concerns over issues like the coronavirus pandemic and tensions between the United States and China weighed on investor sentiment.
Gold’s spot price eclipses the previous record price set in September 2011.
“While we believe gold will continue to be underpinned by mounting geopolitical tensions, in our view, the main drivers of the gold price are its negative correlation with real interest rates and the dollar,” UBS chief investment officer said Monday. Mark Haefele to the customers.
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.
In a note circulating before the new highs, Vivek Dhar of the Commonwealth Bank of Australia said the drop in 10-year US Treasury yields has been the “biggest driver” for gold.
“When long-term real yields increase in the United States, gold is less attractive, relative to interest-bearing securities, as gold has no ability to generate income,” said Dhar, mining commodity analyst. and energy of the company. “The drop in US 10-year real yields is primarily due to an increase in US 10-year inflation expectations.”
Johan Jooste of the CIO Global 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.
