SMM: COMEX gold futures continued their recent rally on Tuesday, recording their best quarterly performance in four years, as uncertainty over the economic recovery and ultra-low interest rates boosted demand for gold.
Comex August gold futures settled at $1800.50 an ounce, up 1.1% or $19.3 an ounce at 13:30 in New York. Gold prices rose 13 per cent in the second quarter, the biggest quarterly increase since early 2016.
On Tuesday, gold closed above $1800 an ounce for the first time since September 2011.
As the global economy reopened, stocks and other parts of the market rebounded, but many investors remained bullish on gold because of the unknown direction of the Xinguan pneumonia epidemic. Low and negative yields on global bonds also make gold more attractive to investors looking to invest.
"the opportunity cost of holding non-profitable precious metals is negligible when real interest rates are negative, which undoubtedly promotes the current risk hedging against gold and other precious metals," JonathanButler, a precious metals strategist at Mitsubishi, said in a report.
Gold prices have been boosted recently by an increase in cases of new crown pneumonia in states such as Texas, Florida and California. Some analysts worry that a new round of economic shutdowns could stall the nascent recovery.
Some states in the United States have announced that they have withdrawn their economic restart plans in response to the surge in the number of new cases.
Federal Reserve Chairman Colin Powell said Monday that the economic outlook is "very uncertain" and will depend on whether the virus can be brought under control and government efforts to support economic recovery.
Expectations that governments and central banks will continue to inject large amounts of money into the global economy to support the recovery have also raised concerns about a long-term rebound in inflation. This has prompted some investors to turn to gold, while others use gold as a hedge against rising consumer prices.
A weaker dollar also makes precious metals cheaper for overseas buyers, supporting precious metals prices.
Despite the recent strong rally, some analysts remain cautious about reversing the situation, especially if there is more positive news about the development and treatment of the new crown pneumonia vaccine, which will support the economy. Traders say gold prices have risen nearly 20 per cent so far this year and are vulnerable to a correction if momentum changes.
For other precious metals, September silver futures rose 57.30 cents to settle at $18.637 an ounce.
October platinum futures rose $23.00 to settle at $851.2 an ounce.
September palladium futures rose $33.80 to settle at $1966.90 an ounce.
In addition, COMEX9 copper for monthly delivery closed 3.60 cents higher at $2.7285 a pound.
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