Investors are rushing to the safety of gold amid a selloff in US stocks on mounting concerns the COVID-19 outbreak will derail global growth.
Gold jumped as much as 2 percent on Friday, extending its climb to a seven-year high, as the S&P 500 Index posted its first weekly loss since last month.
In a sign that the virus is starting to dent the world’s largest economy, business activity in the US shrank this month for the first time since 2013 with the outbreak disrupting supply chains.
Photo: Reuters
“The persistent, cold-blooded and measured shift in gold higher, despite the US dollar, is telling,” Bank of Nova Scotia metals strategist Nicky Shiels said in e-mailed message. “The breakout is warranted and has legs.”
Gold futures for April delivery rose 1.7 percent to settle at US$1,648.80 an ounce at on the Comex in New York, the highest closing price for a most-active contract since February 2013.
The metal notched a 3.9 percent gain this week, the biggest increase since June last year.
“Gold is in the midst of its perfect storm,” Saxo Bank A/S head of commodity strategy Ole Hansen said.
Prices of bullion in euros as well as Australian and Canadian dollars climbed to records.
Holdings in gold-backed exchange traded funds (ETFs) climbed for 22 straight sessions through Thursday, the longest-ever run, according to data compiled by Bloomberg.
The amount of call options traded in a single day spiked to the highest ever in records dating to 1996, preliminary data showed.
The stretch of inflows “certainly gives an indication about concerns around the global economy,” Andrew Jamieson, global head of ETF product at Citigroup Inc in London, said in an interview with Bloomberg TV.
The outbreak has worsened outside of China, while a jump in cases in Iran is also raising concern.
Chinese authorities adjusted the number of cases for the third time this month, raising more questions over the reliability of the data.
In more than half of the world’s 20 biggest economies, analysts now expect looser budgets this year — in other words, bigger deficits or smaller surpluses — than they did six months ago, a Bloomberg survey of economist forecasts showed.
The Commonwealth Bank of Australia expects the US Federal Reserve to ease twice in the second half of the year as the outbreak threatens the global economy.
Still, lower US yields and weaker equities could push gold prices further toward US$1,750 an ounce even if the outbreak is contained during the first quarter, Goldman Sachs Group Inc has said.
If the outbreak stretches beyond that, “we see substantially more upside from here — toward US$1,850 an ounce, depending on the magnitude of the global monetary policy response,” the bank said in a note on Friday.
Other precious metals:
‧Silver futures climbed on the Comex.
‧On the New York Mercantile Exchange, palladium futures rose, while platinum futures declined.
AI BOOST: Although Taiwan’s reliance on Chinese rare earth elements is limited, it could face indirect impacts from supply issues and price volatility, an economist said DBS Bank Ltd (星展銀行) has sharply raised its forecast for Taiwan’s economic growth this year to 5.6 percent, citing stronger-than-expected exports and investment linked to artificial intelligence (AI), as it said that the current momentum could peak soon. The acceleration of the global AI race has fueled a surge in Taiwan’s AI-related capital spending and exports of information and communications technology (ICT) products, which have been key drivers of growth this year. “We have revised our GDP forecast for Taiwan upward to 5.6 percent from 4 percent, an upgrade that mainly reflects stronger-than-expected AI-related exports and investment in the third
Mercuries Life Insurance Co (三商美邦人壽) shares surged to a seven-month high this week after local media reported that E.Sun Financial Holding Co (玉山金控) had outbid CTBC Financial Holding Co (中信金控) in the financially strained insurer’s ongoing sale process. Shares of the mid-sized life insurer climbed 5.8 percent this week to NT$6.72, extending a nearly 18 percent rally over the past month, as investors bet on the likelihood of an impending takeover. The final round of bidding closed on Thursday, marking a critical step in the 32-year-old insurer’s search for a buyer after years of struggling to meet capital adequacy requirements. Local media reports
TECHNOLOGICAL RIVALRY: The artificial intelligence chip competition among multiple players would likely intensify over the next two years, a Quanta official said Quanta Computer Inc (廣達), which makes servers and laptops on a contract basis, yesterday said its shipments of artificial intelligence (AI) servers powered by Nvidia Corp’s GB300 chips have increased steadily since last month, should surpass those of the GB200 models this quarter. The production of GB300 servers has gone much more smoothly than that of the GB200, with shipments projected to increase sharply next month, Quanta executive vice president Mike Yang (楊麒令) said on the sidelines of a technology forum in Taipei. While orders for GB200 servers gradually decrease, the production transition between the two server models has been
ASE Technology Holding Co (日月光投控), the world’s largest integrated circuit (IC) packaging and testing supplier, yesterday announced a strategic collaboration with Analog Devices Inc (ADI), coupled with the signing of a binding memorandum of understanding. Under the agreement, ASE intends to purchase 100 percent shares of Analog Devices Sdn Bhd and acquire its manufacturing facility in Penang, Malaysia, a press release showed. The ADI Penang facility is located in the prime industrial hub of Bayan Lepas, with an area of over 680,000 square feet, it said. In addition, the two sides intend to enter into a long-term supply agreement for ASE to
RSS