‘Safe haven’ gold has a rich 3,000-year history

HONG KONG: Gold briefly chalked up another record yesterday before easing later in the day as the dollar clawed back earlier losses, while equity markets struggled to hold on to gains with fears about the coronavirus pandemic mounting.

With worrying new spikes in infections in Asia and Europe-on top of the already-high new US casesforcing governments to impose strict containment measures, the global economic outlook remains clouded, putting the brakes on a months-long stocks rally. The virus uncertainty descending on trading floors, combined with China-US tensions, sent gold soaring nearly 30 percent and yestrday it hit another record of $1,981.27, smashing the previous day’s alltime high, but it later pared the advance to sit lower for the day.

But observers say $2,000 could be broken as early as this week, with focus on the Federal Reserve’s next policy meeting, which is tipped to see it unveil more easing measures to support the world’s top economy. US second-quarter economic growth data is also due this week, and a disappointing reading on what is expected to be a historic contraction could fuel further dollar weakness.

“Although little is expected on policy, (bank boss Jerome) Powell’s tone in the press conference will be key especially in light of the recent uptick in virus cases and the knock-on consequences,” said AxiCorp’s Stephen Innes.

The rush for bullion has also dragged silver to a seven-year high above $26 an ounce before that also edged back. “There seems to be enough momentum in the US money supply to actually push gold higher,” Fat Prophets analyst David Lennox said. “As COVID19 continues to ravage the economy, there’s probably more stimulatory action to come. As the US dollar weakens, obviously gold will improve, but it’s more a matter of the acceleration of US money supply, and that’s caused by governments obviously throwing money into the economy.”