Inside Financial Markets

Gold pierces $1,800 barrier in run to 9-yr peak as virus woes mount

July 8 (Reuters) – Gold briefly breached $1,800 an ounce on
Wednesday for the first time since 2011 as mounting fears over
the fast global spread of the coronavirus sent investors
scurrying for safe havens.

Spot gold XAU= had risen 0.3% to $1,799.22 per ounce by
0854 GMT, after hitting its highest since November 2011, at
$1,800.18, earlier in the session.

U.S. gold futures GCcv1 rose 0.2% to $1,812.90 per ounce.

European shares opened lower as soaring COVID-19 cases
dented hopes of a swift economic recovery. .EU

“Investors are hedging their exposure to riskier assets
simply because there’s a growing and widening belief that any
recovery is unlikely to be v-shaped,” said Michael Hewson, chief
market analyst at CMC Markets UK.

“Markets generally tend to operate through a prism of
optimism and that optimism is being tested at the moment and
gold is benefiting from that.”

The United States has exceeded 3 million infections, while
cases also grew worldwide. (Full Story)

Adding to the economic worries, U.S. Fed officials expressed
concern that the surge threatened to pinch consumer spending and
job gains. (Full Story)

The European Commission also forecast the euro zone would
drop deeper into recession this year. (Full Story)

However, in the medium to longer-term, an improvement in the
economic backdrop could weigh on gold, Julius Baer analyst
Carsten Menke said in a note, pointing out that safe-haven
demand has been the strongest in countries hit the hardest, such
as the U.S. and the UK.

Mirroring appeal for the metal, prices of which have rallied
over 18% so far this year, gold-backed exchange traded funds
added 104 tonnes of bullion worth $5.6 billion in June, the
World Gold Council said on Tuesday. GOL/ETF (Full Story)

“The health, financial and economic uncertainties generated
by the COVID-19 pandemic and its aftermath are likely to
continue to support gold’s rally well into 2021, but at a
reduced level,” HSBC analysts said in a note.

Palladium XPD= fell 0.7% to $1,902.17 per ounce, platinum
XPT= fell 0.6% to $830.21 per ounce and silver XAG= rose
0.5% to $18.38 per ounce.

Ahsan Baig

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