Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Gold up as Covid Explosion Restores Safe Haven Bids

Published 12/11/2020, 20:24
Updated 12/11/2020, 20:25
© Reuters.

© Reuters.

By Barani Krishnan

Investing.com - New daily record highs in U.S. coronavirus cases have brought back to gold a familiar theme that’s pushing the yellow metal higher — safety bids.

Void of other market drivers or dizzying spikes in the dollar, the safe haven crowd latched on to record infection and hospitalization rates across the United States to boost gold prices by just over half a percent on the day. The thematic play was reinforced by the risk-off mood on Wall Street, where the Dow was down some 400 points, or 1.4%.

“Bulls take up the safe-haven baton on Covid spread,” gold chartist Ross J. Burland said in a blog on FX Street.

New York-traded gold for December delivery settled up $11.70, or 0.6%, at $1,873.30 an ounce. It has been a rough week for the benchmark gold futures contract, which shed 0.8% in the previous session and rose 1.2% on Tuesday after an epic 4.5% plunge on Monday.

Spot gold, which reflects real-time trades in bullion, was down $12.53, or 0.7%, to $1,864.89 by 1:55 PM ET (18:55 GMT).

Thursday’s rebound in gold was also aided by expectations that the Federal Reserve will inject fresh funds into the markets to ensure they don’t freeze up again like they did March, TD Securities said.

''Treasury supply pressures, rising real rates and Fed pricing inching closer to late 2023 from mid-2024 are all reasons that the Fed may step in to keep policy supportive and prevent an undue deterioration in financial conditions,'' the Canadian bank-backed brokerage said in a statement.

U.S. coronavirus cases hit a new daily record on Wednesday, with 140,543 reported, marking the ninth straight day where they stood at above 100,000. According to Johns Hopkins University, some 10.4 million Americans have contracted the Covid-19 so far and nearly 242,000 have died from complications caused by the virus.

Gold futures have hit a bump since soaring to record highs of nearly $2,080 in early August. The run-up and subsequent fall to mid-$1,800 levels was sparked by bets over a second Covid-19 stimulus package that never materialized.

The U.S. Congress passed roughly $3 trillion in March under the Coronavirus Aid, Relief and Economic Security (CARES) Act to provide grants and loans to US businesses and paycheck protection to qualifying citizens and permanent residents.

Since then, Democrats in the House of Representatives have been locked in a stalemate with Senate Republicans on a successive package to the CARES, arguing over the size of the next relief, as thousands of Americans, particularly those in the airlines sector, risk losing their jobs without further aid.

The U.S. economy shrank 5 percent in the first quarter and 31.4 percent in the subsequent three months to hand the country its worst recession ever as most of the 50 states went into lockdown to stem the outbreak of Covid-19. While the economy rebounded 33.1 percent in the third quarter after most businesses reopened, new daily record highs coronavirus cases now are threatening the recovery.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.