Gold's 'Freight Train' Rally Continues With Sights Set on Record

Gold's 'Freight Train' Rally Continues With Sights Set on Record

Gold futures prices soared to a nine-year high of $ 1,856.60 per troy ounce in London on Wednesday, inching closer to their record high of $1,920 an ounce hit in September of 2011.

Meanwhile, U.S. economy healing from COVID-19 stays sluggish and the unrelenting increase of global cases continues.

Oil prices edged higher, supported by a weaker dollar.

"The pace of this thing is unbelievable", Bob Haberkorn, a senior market strategist at RJO, said by phone.

"People are not buying marriage related jewellery as not many weddings are taking place and if at all they are then people are keeping it low key", Padmanabhan stated.

Gold's rally this week has been driven primarily by real yields pushing deeper into negative territory in US Treasury markets, making the precious metal that much more appealing, as it is a non-yielding asset. Gold prices rose above the $1,700 per ounce level in March.

The precious metal is now valued at more than 82 times the price of silver. Spot silver also advanced, bringing gains this week to more than 17%, the most since 1980.

With interest rates sitting near zero and uncertainty looming over markets, "gold is an attractive medium to have", Mobius said.

Spot gold was up 0.3% at $1,893.21 per ounce by 0739 GMT, having hit its highest since September 2011 at $1,897.16 on Thursday.

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"I would be buying now and continue to buy", said Mobius, who is the founder of Mobius Capital Partners.

After a 18% surge in 2019, gold prices have moved sharply higher this year amid coronavirus crisis and as central banks cut interest rates to try and stem the damage.

December, which overtook August as the contract with the highest open interest according to data released when Friday's Asian trading session was already underway, touched 1,927.10oz Thursday.

On the geopolitical front, Secretary of State Michael Pompeo cast China's leaders as tyrants bent on global hegemony. This follows the U.S. government's similar order on China's consulate in Houston earlier this week.

In yet another escalation, China ordered the United States to close its consulate in the city of Chengdu, responding to a US demand for China to close its Houston consulate.

Yes, there is more need than ever to keep governments spending, the extra money being printed will likely prompt investors to increase their gold exposure, and once it clearly breaks the 1900 psych resistance, it will cut to 2000 like a hot knife through butter. Europe's private-sector activity data for July showed a return to growth, yet firms cut jobs for a fifth straight month.

The euro advanced 0.44% to $1.1645, strengthened by the European Union's approval on Monday of a 750 billion-euro ($857 billion) recovery fund to revive the region's economies.

The Federal Reserve meets next week to decide if further accommodation is needed, while President Donald Trump promised a "great third quarter" for the economy.

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