US $ 1,800 gold rally sees ETF inflows surpass year record


The attractiveness of gold is only getting stronger as 2020 unfolds. Cash prices reached US $ 1,800 per ounce and inflows to bullion-backed exchange traded funds since the start of the year have surpassed the record high set in 2009.

Investors favored heaven this year as the coronavirus pandemic spreads through economies, spurring sustained entry into gold-backed ETFs, central banks and governments sparking large stimulus packages. The United States recorded new case and death records on Tuesday, and Atlanta Federal Reserve Bank president Raphael Bostic said the resurgence of the virus could threaten the pace of the US recovery.

“A massive investor response to COVID-19 has pushed ETF holdings to record levels, the impact of which has offset declining demand for jewelry and absorbed increases in recycling,” said James Steel, chief analyst precious metals at HSBC Securities (USA) Inc. New entries are expected “as investors react to high risks and low returns,” he said in a note.

Gold-backed ETF holdings rose to 3,234.6 tonnes on Tuesday, according to initial data compiled by Bloomberg. This is an increase of 655.6 tonnes to date in 2020, outpacing the increase in tonnage observed in 2009. The total has increased monthly this year.

Spot gold rose 0.2% to US $ 1,798.55 an ounce at 9:36 a.m. in London, after surpassing US $ 1,800 to reach its highest since November 2011. In other metals precious, silver and platinum were higher while palladium was little modified.

Bullion prices and holdings should broaden the gains, with Goldman Sachs Group Inc. saying the metal could hit a record high of $ 2,000 in the next 12 months and JPMorgan Chase & Co. recommending that investors stay loyal to bullion.

“Short-term price risks remain biased upward until the virus is brought under control,” said Carsten Menke, next-generation research director at Julius Baer Group Ltd.

“The almost unprecedented peacetime fiscal and monetary response to Covid-19 provides gold with two substantial bullish inputs: liquidity and debt,” said Steel of HSBC. “Low interest rates, monetary accommodation, including expanding the balance sheet and large fiscal spending around the world for the foreseeable future, will cement and prolong the recovery of gold. ”

More Fed support could be on the way. Vice President Richard Clarida said policymakers would likely turn to additional forecasting and asset purchases if the economy needed more help. “We can do more,” he told CNN International.

– With the help of Elena Mazneva.


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