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8 Jul, 2020 09:45

Covid-19 crisis pushing gold price to all-time highs

Covid-19 crisis pushing gold price to all-time highs

Gold has extended its rally with prices reaching their highest level in more than nine years this week. The precious metal has been doing very well lately as investors are clamoring for safe haven assets amid market volatility.

Gold surged above $1,800 on Tuesday, closing above that key resistance level. This is its highest value since 2011, and the second attempt to trade and close above $1,800 over the last month. The metal was trading up 0.2 percent on Wednesday, at $1,799 per ounce.

“It’s logical to expect gold to outperform most assets in an environment of unparalleled central-bank easing, and we foresee the precious metal maintaining the upper hand in most scenarios,” Bloomberg Intelligence senior commodity strategist Mike McGlone wrote.

According to him, slow economic recovery is going to put pressure on commodities, except for gold, which will head to its record high of $1,900 an ounce. “Depression-like global conditions should press the BCOM [Bloomberg Commodity Index – Ed.] below the 2016 trough and gold above its all-time high, about $1,900 an ounce,” he said.

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Gold has been trading above its new base level of $1,700 an ounce since mid-April. “Every day that passes above this level builds a firmer base for the metal to make the next move in its stair-step rally,” McGlone said.

“The coronavirus is creating almost perfect conditions for commodity price deflation, central-bank easing and rising gold prices… Gold stands to be a primary beneficiary.”

The strategist added that, “Enduring US-China trade tension and an unlikely V-shaped global economic recovery keep our price view as unfavorable for broad commodities and favorable for gold. We see little to prevent the metal from reaching all-time highs and the Bloomberg Commodity Spot Index from extending its 2016 low.”

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