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.
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