Spot gold breaks through US$2,000

Spot gold soared to a record above US$2,000 an ounce as investors continue to seek a haven for their assets amid daunting economic and geopolitical risks.

Gold has rallied in the past year as the coronavirus pandemic prompts unprecedented amounts of stimulus to shore up economies, including lower rates, which are a boon for non-interest-yielding gold. Simmering geopolitical tensions — including a massive explosion at Lebanon’s main port on Tuesday — are also boosting demand.

“People want safety, and safety right now is gold because Treasuries are not yielding up,” Bob Haberkorn, senior market strategist at RJO Futures, said by phone.

Spot gold ended the day at US$2,016.57 an ounce, up two per cent. Bullion for immediate delivery surged 11 per cent in July, the biggest monthly gain since 2012.

The most-actively traded gold futures on the Comex also reached a record on Tuesday before settling at US$2,021. Spot silver rose 6.7 per cent to US$25.93 an ounce, while spot platinum and palladium also advanced.

Holdings in both goldand silver-backed exchange-traded funds have climbed to records in the past week amid concern about the fallout from the pandemic. Investors are so worried about the global outlook that worldwide holdings in gold-backed ETFs now stand behind only the official U.S. reserves of bullion after they surpassed Germany’s holdings.

The impact of the pandemic has driven real yields deeper into negative territory, which has boosted interest in the haven of gold. The dip below -1 per cent on the 10-year is “a pretty big level,” according to TD Securities analyst Ryan McKay.