Gold Price7 Aug 2020 09:59
Thursday, 8/06/2020 14:38GOLD PRICES have now hit fresh highs four days in a row while Thursday saw European stocks fall as traders focus on US stimulus talks and US job data writes Atsuko Whitehouse. Spot gold leaped 1.4% to hit $2064.83 per ounce, another new all-time high this Thursday lunch time. It has already surged 4.5% this week, breaking the $2000 milestone, after gold prices in July rose 6.4%, the fastest gain since February 2020. It has gained 35% this year and is one of 2020’s best performing assets. “Gold is at all-time highs but strong fundamentals and demand for diversifying assets imply further gains,” said Luca Paolini, chief strategist at Pictet Asset Management. This sentiment was also shared by StoneX analyst Rhona O’Connell in her latest note, “if we look at gold in real terms, deflating by the US CPI, then we are nowhere near an all-time high.” “The intraday high on 21st January 1980 (Iranian hostages, Afghanistan crisis, second oil crisis and the Hunts trying to corner silver) was, in today’s money, $2,822 per ounce, so that at $2,040 we are still 28% below that high,” Ms O’Connell continued. “We’re seeing an ongoing deterioration in the US dollar, US yield curve dropping further and an increase in inflation expectations,” said Bart Melek, head of commodity strategies at TD Securities. “This implies that for the foreseeable future, the opportunity cost of holding gold is going to get less and less.” The yield on 10-year Treasuries sank two basis points to 0.53% Thursday, while US 10-year real yields, which considers inflation, fell to an all-time low of minus 1.02 per cent this month. The dollar index, which measures the greenback against a basket of global peers, slumped to a two-year low as investors weighed whether the US economic recovery from the coronavirus hit was lagging other major economies as private payroll growth slowed sharply in July said ADP, the payroll processor yesterday. US jobless claims beat expectations and dropped to 1.2 million according to data published today. The government’s official monthly employment report is due on Friday.
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