Commodity Blog

Commodity news, technical and fundamental analysis, market data on precious metals, energies, industrial metals, and soft commodities


Gold Posts Sixth Straight Weekly Gain Amid Uncertainty, Additional Stimulus

July 17, 2020 at 19:29 by Andrew Moran

Gold futures are recording their sixth consecutive weekly gain as investors await additional fiscal and monetary stimulus in US and Europe. The yellow metal is also trading at a nine-year high over uncertainty in the broader global financial market amid surging COVID-19 cases. With gold continually trading at around $1,800, is the precious metal ready to test $1,900?

August gold futures rose $11.80, or 0.66%, to $1,812.20 per ounce at 19:15 GMT on Friday on the Comex division of the New York Mercantile Exchange. Gold prices will enjoy a 0.6% weekly gain, adding to its year-to-date surge of 20%. The big story for the yellow metal is that is has enjoyed six straight weekly gains.

Silver, the sister commodity to gold, is closing in on $20. September silver futures advanced $0.177, or 0.9%, to $19.75 per ounce. The white metal picked up a 3.5% weekly increase, lifting its 2020 rally to nearly 11%. Over the last three months, silver prices have soared nearly 30%.

Although jewelry and potentially bullion demand is considered to be lower, investment demand for gold and other metal commodities has remained strong. This is offsetting the decline in jewelry purchases, allowing prices to remain at their best levels since 2011. Despite all eyes on gold’s ascent, analysts think silver has a brighter short- and medium-term outlook due to its industrial use.

That said, investors are pouring into the metals market on expectations that the US and Europe will unleash additional fiscal and monetary stimulus programs. The Federal Reserve and the European Central Bank (ECB) have been pushing governments to expand their fiscal tools to support the economic recovery, something that both the Congress and the European Commission are debating.

With the Fed funds futures forecasting negative interest rates in the US by spring 2021, non-yielding gold has become even more attractive for traders looking for a hedge. It also suggests that the market is betting on a prolonged downturn as the COVID-19 pandemic is going strong in the US with a record 77,000 new cases, raising its total to 3.7 million.

Overall, uncertainty continues to be the driving factor for gold, despite growing confidence in the broader market.

Gold prices are benefiting from a weaker greenback as the US Dollar Index tumbled 0.44% to 95.92, from an opening of 96.28. The index will suffer a weekly drop of 0.75%. A lower buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.

In other metal markets, August copper futures edged up $0.005, or 0.19%, to $2.907 per pound. September platinum futures tacked on $15.00, or 1.79%, to $852.00 an ounce. September palladium futures surged $31.70, or 1.57%, to $2,056.80 per ounce.

If you have any questions and comments on the commodities today, use the form below to reply.

Leave a Reply