Gold extends record rally on softer dollar, stimulus bets
· Safe-haven gold scaled an all-time peak on Wednesday, extending a record run above the $2,000 mark on a weaker dollar and bets for more stimulus measures to revive a pandemic-ravaged economy.
· Spot gold hit a record high of $2,030.72 in early Asian trade around 0234 GMT, but later dipped to $2,014.41, with the slight retreat attributed to profit-taking.
· U.S. gold futures rose 0.7% to $2,032.30.
· “The drop in the dollar and nominal yields, as speculation remains rife about global growth and any U.S. fiscal package, is what fundamentally drove gold prices higher,” said IG Markets analyst Kyle Rodda.
· “The outlook remains very strong for gold. Interestingly, we’ve seen traders reduce their long exposure to gold throughout this recent rally, suggesting new buyers could still come back into the market to push prices higher,” he said.
· Coronavirus cases continue to surge in the United States and dozens of U.S. states have had to pause or roll back their reopening plans. The global tally stood at more than 18.41 million.
· The rapid rise in cases has dented hopes of a swift U.S. economic rebound, sending the five-year Treasury yield to a record low, reducing the opportunity cost of holding non-interest bearing gold.
· The U.S. dollar, considered an alternative safe-haven, fell 0.3% against its rivals, making gold cheaper for holders of other currencies.
· White House negotiators vowed to work “around the clock” with congressional Democrats to try to reach a deal on coronavirus relief by the end of this week.
· “Despite of potential short-term pullback, the mid-to-long-term prospect of gold and other precious metals remains bullish against the backdrop of low interest rate environment and fiscal + monetary stimulus,” said DailyFx strategist Margaret Yang.
· Elsewhere, silver dropped 0.7% to $25.83 per ounce, platinum fell 0.9% to $929.60 and palladium slipped 1.5% to $2,107.38.
Gold price has another $200 to go after soaring past $2,000 — analysts
Eyes are on lower yields, said TD Securities head of global strategy Bart Melek.
Gold got a leg up along with silver and crude oil on the news of an explosion in Beirut, which triggered the fear of missing out, said Blue Line Futures chief market strategist Phil Streible.
Tuesday’s move up also comes after a slight correction on Monday, added Melek, noting that gold could be looking at $2,100 next.
“We are at a record level. The next big Fibonacci would be $2,110 — this is where the 2011 gold high really is if you were to adjust for inflation,” he said. “Out target average for end of next year is at $2,100.”
The bull market looks healthy even above $2,000 an ounce, said Streible.
“All the technicals line up really good. As long as the lower real yields occur and the dollar continues to weaken, you’re going to continue to see gold bank all the time highs,” Streible told Kitco News. “It’s a pretty healthy bull market right now. The ADX, which measures the strength of the trend, is at 44, which says that it's a healthy, upward trending market.”
Gold tends to shoot for round numbers and $2,200 could be next for gold, added Streible.
“It seems like the more people talk about round numbers, the more they become like a self-fulfilling prophecy. Once it got to $1,921, we had to go to $2,000,” he said. “The $2,200 is the next resistance level based on the breakout at $1,857 to our most recent consolidation. That would be the Fibonacci extension.”
Streible also warned that, at the same time, this could be the high in gold if news of a successful vaccine rollout hit the market.
India's July gold imports drop 24% y/y as prices surge to record - govt source
India’s gold imports in July fell 24% from a year earlier as a rally in local prices to a record high curtailed retail purchases amid lockdown in many towns to curb the spread of the coronavirus, a government source said on Tuesday.
The world’s second-biggest consumer of the precious metal imported around 30 tonnes of gold in July, down from 39.66 tonnes a year ago, the source said. The source asked to remain anonymous since he is not authorised to speak to the media.
In value terms, July imports edged up to $1.78 billion from $1.71 billion a year ago, he added.
Reference: CNBC, Reuters, Kitco
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