By David Brough
Gold prices are up by almost 20 percent so far this year as rising cases of COVID-19 have exacerbated fears over the global economic outlook, and triggered a flight to safety by investors.
The number of new cases of coronavirus rose by almost 260,000 in 24 hours, the largest single-day increase since the pandemic began, the World Health Organization (WHO) said on July 18.
The emergency has devastated economies, provoking central banks to deliver ambitious stimulus measures, including historically low interest rates, boosting the appeal of so-called “safe-haven” assets such as gold.
Gold is holding above its key support level of $1,800 per ounce. Spot gold was up 0.6 percent to $1,809.54 per ounce on July 17, trading higher for the sixth straight week as coronavirus cases continued to mount around the world.
Tensions between the United States and China have added to the appeal of gold as a safe haven, analysts say.
The potential upside of gold prices could be limited by progress to find a coronavirus vaccine, they add.
“The weekend saw the publication of Murenbeeld & Co’s latest gold price forecasts which are remarkably bullish for this usually cautious economic forecasting team,” Lawrie Williams, precious metals commentator for bullion dealer Sharps Pixley, wrote on July 18.
“The net outcome of their latest forecast is an average gold price of $1,861 for this year’s Q3 and $1,966 for Q4 (the actual gold price average figure for Q2 was $1,711 and Q1 $1,583, which demonstrates how bullish the new estimates actually are).”
Disclaimer: Any opinions expressed in this article are solely those of the author and should not be seen as investment advice.