Gold hits record high as dollar plunging adds fuel to record run

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Gold prices hit record highs on Monday as the escalating dispute between the United States and China hammered the dollar and raised expectations that central banks would continue to push stimulus to ease the pain economic impact of a worsening coronavirus pandemic.

Spot gold rose 1.5% to $ 1,928.83 an ounce at 0306 GMT after hitting an all-time high of $ 1,933.30. US gold futures rose 1.4% to $ 1,924.20.

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Silver also joined the rally, climbing 4.5% to its highest level since September 2013 to $ 23.86 an ounce.

With the dollar being significantly weaker, “a lot of funds are now turning to gold,” said Edward Meir, analyst at ED&F Man Capital Markets.

“And as the (viral situation) gets worse, the market is discounting more stimulus for a longer period and in greater quantity, and all of that is bullish for gold,” he added.

PRICE OF SILVER OVER EXTERNAL GOLD

The dollar fell to an almost two-year low against major currencies, as a standoff between Washington and Beijing showed no signs of slowing, with both sides ordering consulates in Chengdu and Houston to close.

The COVID-19 outbreak also continued to worsen, with more than 16.13 million people cases worldwide and 644,836 deaths, prompting expectations for greater stimulation to scale world to mitigate the economic blow.

Gold tends to benefit from a widespread stimulus as it is seen as a hedge against inflation and currency degradation.

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Republicans in the White House and Senate have reached “agreement in principle” on the next coronavirus relief bill, a White House official said on Sunday.

Gold’s record run could gain further momentum on technical buys and as stop losses are removed, said Jeffrey Halley, senior market analyst at OANDA, adding that “the move to $ 2,000 l ‘ ounce will happen much faster than the jump from $ 1800 to $ 1920. ”

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Elsewhere, platinum rose 1.4% to $ 926.58 and palladium climbed 0.5% to $ 2,230.16.

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu)

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