By Joe Wallace
Gold costs zoomed to a document Monday, as a weakening greenback injected new momentum right into a rally pushed by uncertainty in regards to the world economic system.
Futures contracts for delivering gold in August shot up as a lot as 2.2% to $1,940.10 a troy ounce, topping the earlier intraday peak of $1,923.70 from September 2011. They ended the day up 1.8% at $1,931, a second consecutive closing document. Gold futures reached an all-time closing excessive for the primary time in almost 9 years Friday, however remained in need of the intraday document.
Monday’s document marked a milestone in gold’s bull run, which many merchants rank alongside these of 2008-11 and the late 1970s. The gloomy outlook for the world economic system, a decline in rates of interest, rising tensions between the U.S. and China, and the greenback’s depreciation have fueled the surge as traders have purchased property they understand to be havens.
“There are nonetheless a number of issues to be apprehensive about, which is why gold is attracting all this consideration and all this cash,” mentioned David Govett, head of treasured metals at commodities brokerage Marex Spectron.
“You are seeing cash slipping out of the inventory market or out of different property and simply eking into gold,” Mr. Govett added. “Gold, as a small market, is shifting a great distance consequently.”
The advance marked gold’s seventh consecutive every day advance, the steel’s longest profitable streak since February. Gold costs have gained almost 9% over the previous month and about 27% this yr, making the steel one of many strongest-performing main property in 2020.
The value of silver, seen as a retailer of worth by traders in addition to having widespread industrial makes use of, rose much more sharply than gold Monday. Futures for September supply, probably the most broadly owned contracts, jumped 7.2% to $24.501 an oz., the best degree in virtually seven years.
Including impetus to gold and silver Monday was a weakening within the greenback, which made the valuable metals extra enticing to traders abroad. The ICE U.S. Greenback Index, which tracks the greenback in opposition to the currencies of six buying and selling companions, fell Monday, extending a current slide that has it on monitor for its worst month in almost a decade.
Gold’s conventional inverse relationship with the greenback had frayed this yr, as each property benefited from haven shopping for through the pandemic. It’s now reasserting itself, an element that may increase gold within the coming months if the greenback continues to slip, mentioned Joni Teves, precious-metal strategist at UBS Group.
Nonetheless, “the transfer in gold this yr has actually been pushed by rising strategic curiosity,” mentioned Ms. Teves. Buyers who have been beforehand uninterested within the treasured steel at the moment are shopping for it, a development that might raise costs above $2,000 an oz. inside six months, she added.
Shares of precious-metals miners together with Barrick Gold Corp. and Newmont Corp. benefited from Monday’s advance in gold and silver, extending their current features. Some gold-mining shares at the moment are up greater than 50% this yr.
Gold costs have leapt in London, the primary hub for getting and promoting gold bars, in addition to in New York’s futures market. In Friday’s public sale, costs topped $1,900 for the primary time because the Financial institution of England and N.M. Rothschild & Sons Ltd., now funding financial institution Rothschild & Co., based the every day worth in 1919.
One issue that distinguishes the present surge in gold costs from the bull run throughout and after the final international monetary disaster is the delicate state of demand for bodily steel. Lockdowns and financial uncertainty have crimped jewellery purchases in India and China, usually two enormous bullion markets.
Up to now, a burst of shopping for by traders has greater than offset the dearth of jewellery demand. But when monetary demand dries up, costs might fall with out bodily consumption to behave as a cushion for costs, mentioned Ms. Teves.
Buyers who would not usually be energetic available in the market till European and U.S. hours purchased gold in skinny Asian buying and selling Monday, exaggerating the rise, in line with Mr. Govett. “London this morning is slightly bit shellshocked,” he mentioned.
Nevertheless, Mr. Govett added that gold might be knocked off beam within the occasion of a correction within the inventory market that prompts traders to promote treasured metals to fulfill margin calls.
Write to Joe Wallace at Joe.Wallace@wsj.com