SMM: COMEX gold futures surged to an all-time high on Monday as the weakening dollar injected new impetus into the gold price rally driven by global economic uncertainty.
Comex August gold futures rose $33.50, or 1.8%, to settle at $1931 an ounce, the second day in a row to close at a record high, 13:30 New York time (01:30 on July 28th). Gold hit $1941.90 a troy ounce, surpassing the intraday high of $1923.70 set in September 2011.
Gold futures closed at an all-time high on Friday for the first time in nearly nine years, but were still below the intraday record.
"the dollar is losing its safe-haven appeal," said EdwardMoya, senior market analyst at brokerage OANDA. "as the dollar falls, you will continue to see gold soar."
Monday's record was a milestone in the gold bull market, which many traders compared to the bull markets of 2008-11 and the late 1970s. The bleak global economic outlook, falling interest rates, rising tensions between China and the US and the depreciation of the dollar have all contributed to the surge in gold prices as investors see gold as a safe haven.
"there is still a lot to worry about, which is why gold has attracted so much attention and capital," said DavidGovett, head of precious metals at commodities brokerage MarexSpectron.
"you see money flowing out of the stock market or other assets and into the gold market," Govett said.
This is the seventh day in a row that gold prices have risen, and it is also the longest run of gains since February this year. Gold prices have risen nearly 9 per cent over the past month and about 27 per cent so far this year, making it one of the strongest major assets in 2020.
On Monday, the price of silver, seen as a hedge by investors and widely used in industry, rose even more than gold. September silver futures rose 7.2 per cent to $24.501 an ounce, the highest level in about seven years.
Another factor driving gold and silver is a weaker dollar, which makes the two precious metals more attractive to overseas investors. The ICE dollar index, the (ICEDollarIndex), fell on Monday, extending its recent decline in what could be the worst month in nearly a decade.
The traditional reverse relationship between gold and the dollar deviated this year as both assets benefited from safe-haven buying during the epidemic. JoniTeves, precious metals strategist at UBS (UBSGroup), said gold is now regaining confidence, which will boost gold prices in the coming months if the dollar continues to slide.
However, Teves said, "the rise in gold prices this year has actually been driven by increased strategic interest." Investors who were not previously interested in gold are now buying, a trend that could push the price of gold above $2000 an ounce within six months, she added.
Including Barrick Gold (BarrickGoldCorp.) And Newmont (NewmontCorp.) Precious metals stocks benefited from Monday's gains in gold and silver, extending recent gains. Some gold miners have risen more than 50 per cent so far this year.
One factor that distinguishes the current surge in gold prices from the bull market during and after the last global financial crisis is the fragile demand for physical gold. Blockades and economic uncertainty discourage jewellery purchases in India and China, which are usually the main gold markets.
So far, heavy investor purchases have more than offset the lack of jewelry demand. But if financial demand dries up and prices are not supported by physical consumption, prices could fall, Teves said.
For other precious metals, October platinum futures rose $10.60 to settle at $966.6 an ounce.
September palladium futures rose $75.60 to settle at $2369.70 an ounce.
In addition, COMEX9 copper for monthly delivery closed up 50 cents at $2.8975 a pound.
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