THE gold price closed in again on $2,000 per ounce as macro-economic conditions continued to favour the metal.
Spot gold rose as much as 0.6% to $1,988.40/oz and traded at $1,973.59/oz in early London trade, said Bloomberg News. Most-active futures traded as high as $2,009.50 on the Comex, the newswire said.
According to RBC Capital Markets, prices may top $3,000/oz should market conditions align to fulfil the bank’s bull case scenario for the metal, described as a 40% probability. In its base-case view, which has 50% odds, prices will pass $2,000/oz in the coming quarters, the bank said.
“Gold positioning indicates that investors’ attitudes toward the metal have changed amid the public health crisis, economic turbulence, and extremely easy monetary policy actions,” Christopher Louney, a market strategist for RBC was quoted to have said by Bloomberg News. “Gold’s outright price gains have made it a star asset in 2020, arguably appearing more popular than ever,” he said.
“Debasement of the US dollar, the more negative real rates, and you’ve still got lingering uncertainties around geopolitics and the US-China relationship,” Wayne Gordon, executive director for commodities and foreign exchange at UBS Group AG’s wealth-management unit was quoted as saying by Bloomberg on July 28. “That combination of things is what’s pushing gold harder,” he said.
The flight to gold is largely a function of the effect of Covid-19 disease on world markets. Infections are picking up again in some US states with cases in California increasing by more than the 14-day average and New Jersey’s virus transmission rate rose further, said Bloomberg.
Global cases surpassed 18 million as the pandemic is now adding a million infections every four days. Australia’s Victoria state tightened restrictions and declared a state of disaster, while the Philippines reimposed a lockdown in Manila.
