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Gold Tops $1,800 As Metal Poised for Best Finish Since 2011

June 30, 2020 at 16:25 by Andrew Moran

Gold futures are rallying on Tuesday as the yellow metal topped $1,800 and is on track for its best finish since 2011. With uncertainty in global financial markets due to rising coronavirus cases and bearish near-term economic outlooks, could gold prices test $1,900 next? That could depend on testimony from Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin later on Tuesday.

August gold futures surged $18.90, or 1.06%, to $1,800.10 per ounce at 15:52 GMT on Tuesday on the Comex division of the New York Mercantile Exchange. Gold prices are poised for their best settlement since August 2011. The yellow metal enjoyed a 13% gain in the second quarter and a 3% jump in June, elevating its year-to-date increase to just below 19%.

Silver, the sister commodity to gold, is also rallying on Tuesday and will have had a better April-to-June period than the yellow metal. September silver futures spiked $0.516, or 2.86%, to $18.58 per ounce. The white metal will post a 32% gain in Q2 and a 1% boost in June, bringing its YTD increase to 4%.

The metal commodities are one of the few major asset classes to possess a positive YTD return. Prices took advantage of the coronavirus pandemic that destroyed the US and global economies and the unprecedented fiscal and monetary relief and stimulus packages employed by governments and central banks everywhere.

In recent sessions, fears over rising COVID-19 cases have contributed to gold’s ascent. There has been a resurgence in more than a dozen US states and China, and Latin America has turned into a hotspot. Tedros Adhanom Ghebreyesus, chief of the World Health Organization (WHO), warned in his grim assessment that the public health crisis is “not even close to being over.”

Six months ago, none of us could have imagined how our world — and our lives — would be thrown into turmoil by this new virus. The pandemic has brought out the best and the worst of humanity.

The jump in coronavirus cases has triggered concerns across financial markets that economies could resort to lockdown measures and strict social distancing guidelines again. With some of the leading economic minds sounding the alarm about the world’s largest economy, the US would not be able to afford another nationwide shutdown, which would inevitably lead to additional government spending.

A weaker greenback also lifted gold prices as the US Dollar Index shed 0.17% to 97.37. The index, which measures the greenback against a basket of currencies, will finish the quarter down 1.7% and the month down 0.3%. Year-to-date, the dollar is up more than 1%. A lower buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.

In industry news, the Commerzbank noted that demand for physical bullion remains weak, particularly in the world’s top market: China. This suggests that paper is mostly driving this bull market.

In other metal markets, August copper futures picked up $0.0295, or 1.1%, to $2.722 per pound. September platinum futures soared $20.80, or 2.51%, to $849.00 an ounce. September palladium futures tacked on $6.50, or 0.34%, to $1,939.60 an ounce.

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