Gold jumped over 2% on Tuesday, rebounding from a five-month low in the previous session, and silver soared nearly 5% as the dollar fell and as U.S. stimulus bets due to mounting COVID-19 cases eclipsed the optimism around a vaccine-led economic recovery.
Spot gold climbed 1.8% to $1,809.01 per ounce by 10:34 a.m. EST (1534 GMT). U.S. gold futures gained 1.8% to $1,812.60.
Gold plunged to $1,764.29 on Monday, a trough since July 2, driven by a rush to riskier assets.
“We saw gold recapture the $1,800 level and a lot of that has to do with the weakening dollar trade,” said Edward Moya, senior market analyst at OANDA.
“The unwind of the gold trade has run its course” and we are likely to see more efforts from the U.S. Congress to support the economy.
Making gold more attractive to investors holding other currencies, the dollar fell on expectations of more U.S. stimulus, with focus shifting to Federal Reserve Chair Powell’s testimony before the Senate Banking Committee later in the day.
In remarks released on Monday, Powell highlighted challenges of production and mass distribution before the economic impact of a vaccine becomes clear.
The Fed is going to remain fairly accommodative, OANDA’s Moya said.
Gold, considered a hedge against inflation and currency debasement, has risen 19% this year, helped by unprecedented stimulus to help coronavirus-hit economies.
“The bottom was in for gold now and we see prices north of $2,000 next year,” said Daniel Ghali, commodity strategist at TD Securities.
“Gold’s actually now in a new regime” with vaccines a likely catalyst for higher inflation expectations as the economy recovers, supporting gold longer term, especially amid lower real rates, Ghali added.
Silver gained 4.3% to $23.58 per ounce, having earlier risen as much as 4.9%.
Rising industrial demand should help silver outperform gold, Fawad Razaqzada, market analyst with ThinkMarkets, said in a note.
Platinum rose 2.3% to $987.42 and palladium rose 1.7% to $2,412.91.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor
Read all the Latest News, Breaking News and Coronavirus News here
Comments
0 comment