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Gold Soars To Kick Off 2021 on Weaker US Dollar, New Coronavirus Variant

January 4, 2021 at 13:55 by Andrew Moran

Gold futures are starting 2021 with a bang, skyrocketing past $1,900 on a weaker US dollar and the possibility of more stringent restrictions to fight the new strain of the coronavirus. But is this the beginning of a renewed bull market, or will the precious metal stabilize?

February gold futures soared $48.20, or 2.54%, to $1,943.30 per ounce, at 12:42 GMT on Monday on the COMEX division of the New York Mercantile Exchange. Gold prices are logged their best annual performance since 2010, advancing about last year.

Silver, the sister commodity to gold, is also spiking on the first trading session of 2021. March silver futures surged $1.223, or 4.63%, to $27.635 per ounce. The white metal also had its best yearly gain in a decade as it popped 50% in 2020.

The metals market was buoyed by a slumping US dollar driven by bullish global financial markets and a recovering economy. The US Dollar Index (DXY) tumbled 0.4% to 89.57, from an opening of 89.93. The index gauges the greenback against a basket of currencies. The DXY plummeted nearly 7% last year. A lower buck is good for commodities priced in dollars because it makes it cheaper for foreign investors to purchase.

Metal commodities are homing in on a two-month peak on fears that major economies will impose stricter restrictions as a new strain of the coronavirus spreads at a rapid rate. The new variant is about 70% more infectious, and early studies say it is responsible for a considerable amount of the latest confirmed cases. The US has reported cases in three states, while the UK considers additional lockdown measures to contain the mutation.

Industry experts say that the other factor to justify gold’s ascent is that trend followers and technical traders have returned to the market.

Politics could also be playing a factor in gold prices. The state of Georgia will be holding a special election on Tuesday. If the Democrats win both contests, they will control the Senate, making it easier to approve the left’s expansionary fiscal policy objectives.

Could gold retest $2,000? It might depend on what unfolds in the first week of January.

In other metal commodities, February copper futures advanced $0.083, or 2.36%, to $3.602 per pound. February platinum futures gained $40.00, or 3.71%, to $1,119.20 per ounce. March palladium futures edged up $8.20, or 0.33%, to $2,462.00 an ounce.

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