Commodity Blog

Gold futures are on track for their best finish since 2019 as the coronavirus pandemic continues to weigh on markets. With a significant uptick in confirmed COVID-19 cases in the US and many other parts of the world, there are concerns among investors that the public health crisis could linger for the rest of the year. A weaker US dollar, additional central bank easing, and disappointing economic contributed to the yellow metal’s ascent at the start of the trading week.

August gold futures surged $15.90, or 0.91%, to $1,768.90 per ounce at 16:50 GMT on Monday on the Comex division of the New York Mercantile Exchange. Gold prices are poised for their best settlement since 2012 when they touched topped $1,700. The precious metal recorded its second consecutive weekly gain last week, edging up 0.2%. Year-to-date, gold is up nearly 17%.

Silver, the sister commodity to gold, is also recording modest gains on Monday. July silver futures tacked on $0.063, or 0.35%, to $17.91 an ounce. The white metal erased all its 2020 losses after it went on a 35% tear in the fallout of the market meltdown in March.

The coronavirus still spooks investors after the World Health Organization (WHO) announced the largest single-day increase in cases of more than 183,000. North and South America contributed to most of the spike. South Korea also declared that a second wave of the virus has begun. Across the US, there have been significant jumps in cases in more than a dozen states.

Last week, the Bank of England (BoE) announced that it would expand its quantitative easing (QE) measures to support economic growth. While it kept interest rates unchanged, it increased its bond-buying program by $125 billion to just below $1 trillion. The BoE also pledged to unleashed stimulus tools should the country require additional support. The central bank joins the Federal Reserve, the Bank of Japan (BoJ), and the European Central Bank (ECB) in intensifying its QE efforts.

The US dollar weakened to kick off the trading week, driven by the global dollar crunch subsiding. With central banks reducing their frequency in dollar swaps, the Fed’s balance sheet recorded a surprise drop. The US Dollar Index, which measures the greenback against a basket of currencies, fell 0.6% to 97.04. A lower buck is good for dollar-denominated commodities because it cheaper for foreign investors to purchase.

On the data front, existing home sales tumbled 9.7% to 3.91 million in May. This is up from the 17.8% plunge in April, but it fell short of the median estimate of -3%.

In other metal markets, July copper futures advanced $0.039, or 1.49%, to $2.65 per pound. July platinum futures spiked $18.00, or 2.18%, to $845.30 an ounce. July palladium futures skyrocketed $25.50, or 1.34%, to $1,933.90 per ounce.

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