Spot gold on Friday topped US$1,900 an ounce for the first time since 2011 and edged closer to an all-time high, with flaring geopolitical tensions and concern over global growth driving demand for haven assets.
Increasing signs that the COVID-19 pandemic is stalling an economic recovery and a spat between China and the US are underpinning bullion’s appeal.
The metal is also getting support from a confluence of low or negative real rates and a slipping US dollar amid massive liquidity injections from governments and central banks worldwide.
The weaker US dollar and plunging yields on government bonds lower the opportunity cost of owning gold.
Gold posted its seventh weekly gain with a 5 percent increase, the longest stretch since 2011, while silver capped its biggest weekly advance in about four decades.
Gold might reach the all-time high by early next week, according to a trader at RJO Futures Inc in Chicago.
“The pace of this thing is unbelievable,” RJO senior market strategist Bob Haberkorn said by telephone. “People just want to buy, buy, buy, they just want to be in — they don’t want to miss it. People are preparing for more money printing, lower dollar in the future and hedging. And there’s no yield on Treasuries right now, so gold is a safe spot given the circumstances of the central banks and the coronavirus.”
Spot gold rose 0.7 percent to US$1,900.19 an ounce in New York. Prices are nearing the record US$1,921.17 reached in September 2011. Comex gold futures for August delivery rose 0.4 percent to settle at US$1,897.50 an ounce.
Spot silver also advanced, bringing gains this week to more than 17 percent, the most since 1980.
Gold’s rally might extend into next year “on dollar wobbles amid rising geopolitical risks in a lower-for-longer interest-rate environment,” Bloomberg Intelligence analyst Eily Ong wrote in a note.
UBS Group AG raised its near-term forecast for bullion to US$2,000 by the end of September.
“When interest rates are zero or near zero, then gold is an attractive medium to have, because you don’t have to worry about not getting interest on your gold and you see the gold price will rise as uncertainty in the markets are rising,” Mobius Capital Partners LLP cofounder Mark Mobius said in a Bloomberg TV interview. “I would be buying now and continue to buy.”
Precious metals funds saw investment inflows of US$3.8 billion in the week to Wednesday, the second-largest weekly amount ever, Bank of America Corp strategists said, citing EPFR Global data.
While spot gold prices are about US$20 away from the all-time high, some futures contracts on the Comex are already trading even higher. December, which overtook August as the contract with the highest open interest according to data released when Friday’s Asian trading session was already under way, touched US$1,927.10 an ounce on Thursday. That is above the record for the most-active contract of US$1,923.70 reached in 2011.
US Secretary of State Mike Pompeo cast China’s leaders as tyrants bent on global hegemony.
His comments came after the US unexpectedly ordered China to close its consulate in Houston, Texas, following what it said were years of espionage directed from the diplomatic compound.
Beijing has rejected the accusations and on Friday ordered the US to close its consulate in Chengdu.
Also on investors’ radars is the prospect for fresh fiscal and monetary policy measures as the path to recovery remains uncertain.
Europe’s private-sector activity data for this month showed a return to growth.
Alphabet Inc’s Google on Tuesday announced plans to buy a New York office building for US$2.1 billion, confirming its push into the US’ largest city despite the COVID-19 teleworking trend. This is the largest real-estate purchase in the US for an office building since the beginning of the global spread of COVID-19, the Wall Street Journal quoted Real Capital Analytics as saying. Google already rents the premises in Manhattan, which are located on the site of a former railroad terminal in the Hudson Square neighborhood. The Silicon Valley giant envisions a campus with a total surface area of 160,000m2 by mid-2023
‘CORE VALUES’: The contract chipmaker did not specify why the employees were dismissed, but media reports said they had leaked information about customer orders Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has fired seven of its employees for violating the company’s “core values,” the world’s largest contract chipmaker said yesterday. While the company did not disclose exactly why it fired the seven employees, local media reports earlier in the day said that the employees had leaked confidential information about customer orders. In a statement, the company said that it fired the seven at once, adding that it released an internal notice last week to inform the entire company of the move ahead of the four-day Mid-Autumn Festival holilday, which ended on Tuesday. TSMC said it fired the seven
MILD ADJUSTMENT: Two previous efforts failed to curtail mortgage financing, although the new measures should not affect property prices, the central bank governor said The central bank yesterday tightened credit controls for second-home mortgages in specific areas and purchases of plots of land, especially in industrial parks. However, the nation’s top monetary policymaker kept its policy rate at a record-low 1.125 percent for the sixth consecutive quarter, despite revising up its GDP growth forecast for this year from 5.08 percent to 5.75 percent. “Board members factored in economic uncertainty at home and around the world,” central bank Governor Yang Chin-long (楊金龍) said, adding that growing inflationary pressure was a temporary phenomenon induced by bad weather and a low base effect for oil prices. International fuel price increases
DOWNCYCLE: Most buyers are wary about placing new orders, and although the decline could also be as little as 3%, it would be the first drop since the start of the year The average selling price of DRAM chips next quarter is expected to decline by up to 8 percent quarter-on-quarter, with memory chips used in notebook computers and consumer electronics seeing the steepest decline due to excess inventory and a shortage of components, market researcher TrendForce Corp (集邦科技) said yesterday. That means the DRAM industry is entering a new downcycle after experiencing a boom for three quarters, the longest uptrend in the history of the industry. The Taipei-based researcher said it expects the balance between supply and demand to begin tilting toward a surplus in the final quarter of this year. Most DRAM