Gold surged to a fresh record on Friday, fueled by US dollar weakness and low interest rates, while silver headed for its best month since 1979.
Spot bullion is up more than 10 percent this month, as US real yields lingered near record lows.
While the ferocity of rallies in gold and silver cooled in the middle of the week, most market watchers predict there might be more gains ahead.
Both metals have added about 30 percent this year, with gold and silver exchange-traded funds boosting holdings to a record, as concern about the fallout from the COVID-19 pandemic fuels demand for havens.
The US Federal Reserve this week repeated a vow to use all its tools to support the US economy, with governments and central banks worldwide already unleashing vast amounts of stimulus to shore up growth.
“Speculation around [US] President [Donald] Trump’s call to delay the election shook the market and saw the yellow metal recover,” TD Securities strategist said in a research note. “In addition to the sudden haven-type flows, poor economic data across the US and Europe keep the hopes for further stimulus high, the dollar weak and real rates on a firm downtrend.”
Increasing deaths in several US states and a partial lockdown in northern England show the pandemic is still wreaking havoc.
Adding to investors’ concerns, Trump floated the idea of postponing the US’ presidential election in November, after dismal economic data was reported on Thursday.
The European GDP numbers also show an unprecedented slump in the second quarter. Yet, Chinese manufacturing figures indicate continued upward momentum, with silver getting added support from bets on stronger industrial demand amid concerns over supplies.
Spot gold rose as high as US$1,983.36 an ounce Friday — a fresh record — and was trading up 0.7 percent at US$1,970.66 in New York. December Comex gold futures hit US$2,005.40 before paring gains to settle 1 percent higher at US$1,985.90 an ounce, as the US dollar edged out of a five-day slump. The greenback is still weak amid concerns its status as the world’s reserve currency of choice is at risk.
Spot silver advanced 2.9 percent to US$24.18 an ounce after a three-day pause in its rally.
“We remain bullish with gold and silver and would not be surprised to see a speculative bull run on silver,” said Frederic Panizzutti, managing director at MKS in Dubai. “Gold at US$2,000 would put silver at around US$30.”
Gold traders on Thursday declared their intent to deliver 3.3 million ounces against the August Comex contract, the largest daily delivery notice in bourse data going back to 1994.
With more stimulus on the horizon, Goldman Sachs Group Inc has said that gold is the currency of last resort amid an inflation threat to the US dollar.
The bank forecasts a rally to US$2,300.
Bank of America Corp on Friday reiterated that prices could soar to as high as US$3,000, while JPMorgan Chase & Co sees the rally losing steam later this year.
“Central-bank rate easing and US bond yields gravitating toward zero are solid underpinnings for gold, as is the potential for increased US stock-market volatility approaching the presidential election,” Bloomberg Intelligence commodity strategist Mike McGlone said in a note.
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