Safe-haven gold was nearing a record high yesterday, when it pierced the $1900 per ounce ceiling as geopolitical tensions, low dollar and Covid-19 kept the yellow metal on its longest climbing march since 2011.
Spot gold climbed to $1,905.99, the highest since September 2011 as a worsening U.S.-China row added to fears over the hit to a global economy already bleeding from the coronavirus pandemic.
The bullion’s bullish appeal was braced by the constant surge in COVID-19 cases, with the U.S. infections reaching over 4 million and global infections standing 15.6 million.
The stubborn bull-gold has surged over 25% this year, supported by low interest rates and stimulus from central banks. Platinum rose 1.3% to $916.97 and palladium climbed 4.3% to $2,216.31. Silver surged over 17% this week, its best since 1987, amid hopes for a recovery in industrial activity.
“Investors are perceiving silver as being undervalued compared to gold and that is why silver has really surged,” said Kitco Metals senior analyst Jim Wyckoff, adding that the next price target would be $25.
Meanwhile, the continued rise of precious metals reflects the low yields on competing assets and a desire among investors to proof investment portfolios against future economic and market shocks. Gold also serves as a hedge against the inflationary effects of substantive government and central bank efforts to support the global economy.
Previous market shocks like the oil crisis and rampant inflation in the 1970s, the global financial crisis in 2008 and the policy interventions that followed have produced high water marks for gold and other precious metals before.
However, sharp interest rate cuts and central banks quantitative easing on an unprecedented scale after the global financial crisis importantly failed to trigger one major driver of precious metals prices – higher inflation. Gold prices hit an all-time high of $1917.90 an ounce on 22 August 2011, before pulling back to about $1,880. Gold could keep working its way higher, but some experts say it is starting to look a bit bubbly. The next few weeks may see the gold reaching the all-important $2000/oz mark or it will bounce back to $1700 to $1800 levels.