Gold is set for biggest gain in a month on Fed View, virus issues

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Gold production at the JSC Krastsvetmet precious metal plant
Photographer: Andrey Rudakov / Bloomberg
Gold futures headed for the biggest gain in over a month after the Federal Reserve promised to keep interest rates lower for longer and investors detected signs of a resurgence of infections in some American states.

The haven has grown higher after President Jerome Powell said on Wednesday that the Fedpledges to “do everything we can, as long as it takes” to help the economy recover from the coronavirus pandemic. Almost all officials plan to keep rates close to zero until 2022, and the central bank has also said it will at least maintain the current bond buying rate.

        "You almost couldn't find a better script for a solid fundamental environment for gold than what we saw yesterday from the Fed," said Matt Weller, global market research manager at Gain Capital Group LLC. "It really is a rampant monetary stimulus environment, and historically, this is exactly the type of environment in which gold has thrived."

Gold Eliminates Recent Losses After Fed Rate Comments, Relaunch

Comex gold futures for delivery in August rose 1.8% to $ 1,752.10 an ounce at 10:46 a.m. in New York. A price close would mark the biggest gain since May 7.

On Wednesday, gold-backed exchange-traded fund holdings increased for the first time in five sessions.

    Le métal reçoit également un soutien alors que l'alarme se développe sur la possibilité d'une deuxième vague de cas de coronavirus aux États-Unis. Les poussées localisées de nouvelles infections dans des États comme le Texas, la Floride et la Californie ont soulevé des inquiétudes chez les experts de la santé, même si le nombre total de cas dans le pays au début de cette semaine a augmenté d'un peu moins de 1%, la plus faible augmentation depuis mars.

“Gold prices are going to go up steadily as we see more political, unrest and Covid-19 titles,” said George Gero, managing director of RBC Wealth Management, by phone.

Before the Fed rally,Goldman Sachs Group Inc. predicts bullion will increase to $ 1,800 per ounce over 12 months and may even seea break above $ 2,000 if inflation expectations exceed a rise in nominal rates – similar to what happened in the third quarter of 2009.

    "Les conditions sont réunies pour que l'or atteigne toujours 1 800 $", a déclaré à Bloomberg Television Dominic Schnider, responsable des matières premières et des devises Asie-Pacifique chez UBS Group AG. Le métal a du soutien "avec des taux qui restent là où ils sont plus longtemps, et les attentes en termes de taux réels pourraient être plus négatives", a-t-il déclaré.

Even with recent advances, futures have not yet peaked this year at around $ 1,789, a record since 2012. There is likely some disappointment among investors that the FedOle Hansen of Saxo Bank A / S, who is still optimistic about gold, has failed to adopt control of the yield curve, which would be a powerful trigger for gold.

“So being the devil’s advocate, I wonder why the metal didn’t react better than it did,” said Hansen.

– With the help of Haidi Lun and Swansy Afonso

    


    

    

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