(Bloomberg) – Gold hit a new record, fueled by weak dollar and low interest rates. Silver headed for her best month since 1979.
Spot bullion surged more than 10% in July, heading for its best month since 2016, as real US yields held close to record lows. While the ferocity of the rallies in both gold and silver cooled in the middle of the week, most market watchers predict that more gains may be ahead.
Both metals have added about 30% this year, with gold and silver exchange-traded funds that boosted stocks to a record high as concerns about the consequences of the coronavirus pandemic demand for fuel for paradises. The Federal Reserve this week repeated a promise to use all of its tools to support the U.S. economy, with governments and central banks around the world already unleashing large amounts of stimulus to shore up growth.
“After a brief period of post-FOMC consolidation, speculation about President Trump’s call to delay the election shook the market and saw the yellow metal recover,” said TD Securities strategists, including Bart Melek, in a note from investigation. “In addition to sudden safe-haven flows, weak economic data in the US and Europe keep hopes of further stimulus high, the dollar weak and real rates on a firm downtrend.”
The increase in deaths in several US states and a partial closure in northern England show that the pandemic continues to wreak havoc.
In addition to investor concerns, President Donald Trump raised the idea of postponing the November elections, after poor economic data on Thursday. European GDP figures also show an unprecedented drop in the second quarter. However, Chinese manufacturing figures indicate a continued upward momentum in the recovery, with silver gaining further support from bets on higher industrial demand amid concerns about supplies.
Spot gold rose to $ 1,983.36 an ounce on Friday, a new record, and rose 0.7% to $ 1,970.66 at 2:58 pm in New York. December Comex gold futures hit $ 2,005.40 before slumping earnings to settle an additional 1% to $ 1,985.90 an ounce as the dollar emerged from a five-day decline. The dollar is still weak amid concerns that its status as the world’s choice reserve currency is at risk.
Spot silver advanced 2.9% to $ 24.18 an ounce after a three-day pause in its recovery.
“We remain bullish on gold and silver and we would not be surprised to see a speculative bull with silver,” said Frederic Panizzutti, managing director of MKS in Dubai. “Gold at $ 2,000 would put silver at around $ 30.”
Also read: gold, silver barely recover strength in relation to S&P 500
Gold traders on Thursday declared their intention to deliver 3.3 million ounces against the August Comex contract, the largest daily delivery notice in the stock market data since 1994.
With further stimuli on the horizon, Goldman Sachs Group Inc. has said that gold is the currency of last resort amid an inflation threat to the dollar. The bank forecasts a rebound to $ 2,300. Bank of America Corp. reiterated on Friday that prices could rise as high as $ 3,000, while JPMorgan Chase & Co. sees the recovery lose strength later this year.
“The easing of central bank rates and the yields on US bonds gravitating toward zero are solid foundations for gold, as is the potential for greater volatility in the US stock market. presidential election, “said Mike McGlone, a commodities strategist at Bloomberg Intelligence, in a note.
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