Gold steadies near record high as dollar stumbles
· Gold prices held steady near record highs on Thursday as a weaker U.S. dollar and hopes of more stimulus measures to mitigate the economic fallout from the pandemic underpinned the metal’s safe-haven appeal.
· Spot gold was steady at $2,039.75 per ounce by 0042 GMT, after hitting an all-time high of $2,055.10 on Wednesday.
· U.S. gold futures rose 0.3% to $2,055.90.
· The dollar index fell 0.2% to hold close to a more than two-year low against its rivals, making gold less expensive for holders of other currencies.
· The U.S. government bond yield curve steepened on Wednesday as prices fell on the prospect of increased supply in longer-dated debt.
· More than 18.66 million people have been reported to be infected by the novel coronavirus globally, while death toll surpassed 700,000 on Wednesday, with the United States, Brazil, India and Mexico leading the rise in fatalities.
· The rapid rise in cases has dented hopes of a swift economic rebound, driving inflows into safe-haven assets such as gold, which has risen more than 34% so far this year.
· U.S. private payrolls growth slowed sharply in July, pointing to a loss of momentum in the labor market and overall economic recovery as new COVID-19 infections spread across the country.
· Top congressional Democrats and White House officials appeared to harden their stances on new coronavirus relief legislation, as negotiations headed toward an end-of-week deadline with no sign of an agreement.
· SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.8% to 1,267.96 tonnes on Wednesday.
· After $2,000 gold price, $4,000 is next; Frank Holmes doubles down on call
The fiscal and monetary conditions have never been stronger for gold prices, and while the yellow metal already broke records this week by hitting $2,000 an ounce, Frank Holmes, CEO of U.S. Global Investors, doubled down on his $4,000 an ounce by the end of this bull cycle call.
Price corrections can happen along the way, Holmes said, but gold investors should buy on the dip.
On the economy, Holmes expects inflation to rise, but rates to stay low, creating a negative real rate environment.
“The greater the negative real interest rates, the greater the price of gold,” Holmes noted.
However, money velocity, a measure of the frequency of consumer transactions and is used as a gauge for economic health, has been decreasing, suggesting the people are not spending money.
· Gold: Fails to break $2056 region imply a correction ahead NFP
“As observed in the 4-hour chart, XAU/USD faced rejection on a few occasions at the two-week-long rising channel resistance near $2056 region. Therefore, a correction looks likely on the cards, as also suggested by the bearish price-RSI divergence.”
· Silver fell 0.4% to $26.91 per ounce, while platinum rose 0.4% to $970.67 and palladium was steady at $2,181.77.
Reference: CNBC, Kitco, FXStreet
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