On June 22, Gold surged toward its highest since 2012. The upside move was supported by fears over a second wave of the coronavirus infections. Also, the precious metal gained as China moves to tighten its oversight of Hong Kong.
Virus cases in some of the regions including California, Florida, Germany, and Texas, are rising. In that context, the WHO is warning of a new and dangerous phase of the pandemic. Nonetheless, there are signs that a recent outbreak in Beijing has been controlled.
China also confirmed its proposed national security law that would enable it to override Hong Kong’s legal system which likely added tensions between Beijing and Washington.
Spot gold gained 0.3% to reach $1,748.41 an ounce by 10:55 a.m. in. that happened after the precious metal touched the highest levels since May 18. At that time, the prices reached their highest levels since 2012.
Silver and platinum also gained as palladium remained mostly stable. Gold is already up by 15% in 2020 supported by the unexpected stimulus aimed to help the global economy cope with the aftermath of the pandemic.
On its part, Goldman Sachs is predicting a record $2,000 gold price in the next 12 months. JPMorgan Chase & Co. Advised that investors should stick with gold since it is most leveraged to a low real-yield environment. The head of the commodity strategy at Saxo Bank A/S, Ole Hansen, said:
“Covid-19 worries together with the eventual inflationary impact of central bank stimulus are providing the support for gold.”
Although the recent gains have again attracted some profit-taking spree, buyers are also returning slowly to the market. The net bullish bets in options and futures increased for the first time in four weeks. That was a recovery from a one-year low, Commodity Futures Trading Commission data showed on June 19.
Currently, investors continue to pile into the gold-backed exchange-traded funds. That move enhanced their holdings by almost 30 tons on Friday, according to data compiled by Bloomberg. Almost 23 tons of that inflow went into SPDR Gold Shares which is the most in a year in tonnage terms.