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Gold Surges As Rising Coronavirus Cases Trigger Market Jitters

June 19, 2020 at 17:08 by Andrew Moran

Gold futures are surging at the end of the trading week, driven by concerns of the rising number of coronavirus cases in China and more than a dozen US states. The yellow metal had been trending relatively flat this week, but the bearish tone on Friday elevated gold prices above the key $1,750 level. With equities tumbling on reports of Apple re-closing some of its stores, investors are fleeing to safe-haven assets.

August gold futures surged $22.30, or 1.29%, to $1,753.40 per ounce at 16:49 GMT on Friday on the Comex division of the New York Mercantile Exchange. Gold is on track to record its second consecutive weekly gain, jumping more than 0.2%. Year-to-date, the yellow metal is up nearly 16%.

Silver, the sister commodity to gold, is also rallying to close out the trading week. July silver futures tacked on $0.317, or 1.81%, to $17.825 per ounce. The white metal is flat for the week, but it has shaved most of its losses in 2020. Silver prices are down about 0.4% YTD.

Despite climbing as much as 400 points in intraday trading, the Dow Jones Industrial Average erased all of its gains on reports that Apple will re-close many of its stores in Arizona and Florida due to rising confirmed cases of COVID-19. The US has seen a 15% increase in the number of coronavirus cases in the last week, while China has also reported an uptick in confirmed cases across the country. The trends have prompted concerns that the world’s two largest economies could endure another severe outbreak.

Global cases have topped 8.5 million, while the death toll nears 500,000.

Moreover, President Donald Trump warned that the US could decouple from China as the two sides engage in bitter trade relations and strife over handling of the public health crisis.

The uncertainty has forced investors to flee into safe-haven assets, including the greenback. The US Dollar Index, which measures the buck against a basket of currencies, rose 0.17% to 97.59, squeaking out a weekly jump of 0.3%. A stronger greenback is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase. When there is havoc in global financial markets, traders dive into the US dollar, which explained its 4% spike in March.

With reports that central banks are set to reduce the frequency of dollar swaps, many analysts are forecasting that the dollar could reclaim many of its gains.

In other metal commodities, July copper futures tacked on $0.0235, or 0.91%, to $2.6115 per pound. July platinum futures picked up $16.10, or 1.98%, to $828.30 per ounce. July palladium futures shed $6.40, or 0.34%, to $1,902.20 an ounce.

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