Gold Settles Above Nine-Year High Amid Coronavirus Resurgence

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Gold futures are rallying on Tuesday as the yellow metal topped $1,800 and looks to reach $1,900. The precious metal continues its impressive 2020 as coronavirus maintained its dominance over global financial markets. Gold prices were capped by a rising US dollar, but a strengthening greenback might not be enough to contain their rally this year.

August gold futures ballooned $14.70, or 0.82%, to $1,808.20 per ounce at 18:55 GMT on Tuesday on the Comex division of the New York Mercantile Exchange. Gold has seesawed in recent sessions, but it has been on a tear in 2020, soaring nearly 20% year-to-date.

Silver, the sister commodity to gold, is recording modest gains. September silver futures edged up $0.033, or 0.18%, to $18.615 per ounce. The white metal has exploded in recent months, surging 22% since the middle of April. Silver prices are also up 4% so far this year after being down for much of 2020.

Precious metals are primarily benefiting from concerns over the resurgence of COVID-19 cases. In more than a dozen states, the US has reported a significant spike in confirmed infections, leading to fears that it would impact the economic recovery. The increase in cases has forced businesses to be nervous again that governments – at the federal or state level – could reimpose strict lockdown measures again, which would inevitably cripple the smaller companies and trigger a drop in the stock market.

As a result, investors are diving into the safe-haven asset as a hedge against this uncertainty.

The US officially has more than three million cases, with 133,000 deaths. Unlike other major countries, the US has not flattened the curve and has instead experienced a dramatic spike. Most of the cases are situated in the northeast, Florida, Texas, California, and Illinois.

Because gold is only going to climb higher, investors may be engaging in profit-taking whenever there are massive gains. When prices drop, gold bugs take advantage of the dip and continue to prop up the metals market.

In industry news, gold-backed exchange-traded funds (ETFs) enjoyed their seventh consecutive month of global positive inflows, adding about $5.6 billion, according to the World Gold Council (WGC). Juan Carlos Artigas, head of research at the WGC, said in a statement:

“Gold ETF investment demand shattered numerous records this year as investors sought safety from the economic turmoil created by COVID-19. To put it in context, inflows in the first half of 2020 significantly exceeded multidecade record levels of net gold purchased by central banks in 2018 and 2019.”

A rising greenback capped gold’s ascent on Tuesday. The US Dollar Index, which measures the buck against a basket of currencies, advanced 0.17% to 96.89, from an opening of 96.75. A stronger greenback is bad for dollar-denominated commodities because it makes it more expensive for foreign investors to purchase.

In other metal markets, August copper futures picked up $0.02, or 0.65%, to $2.803 per pound. August platinum futures soared $24.10, or 2.88%, to $861.80 an ounce. August palladium futures shed $5.80, or 0.3%, to $1,946.50 per ounce.

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