By David Brough
Gold prices continued to rise this week, trading at the highest level in more than 8 years, benefiting from bullion’s safe haven status as coronavirus cases jumped in the United States.
The strength of the U.S. dollar in which gold is denominated, has limited the rise in prices of the precious metal. The dollar has also acted as a safe-haven during the emergency.
Worries over the rise in coronavirus cases around the world, notably in the United States, the world’s biggest economy, combined with central bank stimulus at historically low interest rates to kickstart economies, have fuelled the flight to safety in gold.
The key resistance level of $1,800 per ounce has now been breached, and the all-time high for gold prices of around $1,918 per ounce is coming into focus.
Spot gold was up 0.17 percent at $1,807.91 per ounce on July 10, 2020.
“Ongoing asset purchases by central banks to mitigate the impact of the pandemic have further reduced the opportunity cost of holding non-yielding assets such as gold as interest rates remain low to negative,” wrote Lawrie Williams, precious metals commentator for bullion dealer Sharps Pixley.
“These factors have helped continue to drive gold investment demand, with gold ETFs (exchange-traded funds) a key beneficiary of this momentum – a pattern which seems poised to continue until we see a realistic turnaround in the incidence of COVID-19 infections and deaths in the U.S. and globally.”
Disclaimer: Any opinions expressed in this article are solely those of the author and should not be seen as investment advice.