Gold smashed $ 2,000 an ounce for the first time last night and is now changing hands at $ 2,030 an ounce this morning – comfortably above its previous record set in 2011.
At the start of 2020, gold was only worth $ 1,500 an ounce, but has skyrocketed in recent months.
As a traditional safe haven, gold is benefiting from rising tensions between the United States and China – Beijing being furious that Donald Trump is forcing TikTok to sell its U.S. operations.
Anxiety over a second wave of Covid-19 cases in the coming months is also pushing some investors towards precious metals.
Stephen Innes of AxiCorp Explain:
Concerns remain around a second wave in Europe as daily growth in cases has started to accelerate from shallow levels in most countries. However, the levels are far from close to those seen in the United States, which is now on a downward trajectory.
Still, markets fear a second outbreak of Covid-19 in winter (northern hemisphere), and the associated rise in volatility still favors gold as a defensive strategy.
The recent weakness of the US dollar is also pushing commodity prices up. Traders are also forecasting inflation to accelerate as central banks and governments launch unprecedented stimulus packages to protect their economies.
US politicians are still struggling to agree on the next Covid-19 package, causing some nervousness in the markets.
White House officials have met with congressional leaders for days, but are still divided over the size of the deal – and how to support unemployed Americans.
Treasury Secretary Steven Mnuchin told reporters last night that negotiators had agreed to work “around the clock” to “try to reach a comprehensive deal” by the end of the week, so that a draft law can be drafted and (ideally) approved by Capitol Hill next week.
Also coming today
The latest health check of purchasing managers in the UK and the eurozone is expected to show companies in the service sector resumed growth last month with the easing of lockdowns.
UK car sales figures for July are also due this morning and are expected to show they are up 11% – the first jump this year.
- 9am BST: Eurozone services sector PMI for July; should drop from 48.3 to 55.1
- 9am BST: UK car sales figures for July; is expected to increase by 11%
- 9:30 am BST: UK services sector PMI for July; should drop from 47.1 to 56.6
- 1:15 p.m. BST: ADP payroll survey in the United States in July
- 3 p.m. BST: US service sector PMI for July; should dive to 55 from 57.1
- 3:30 p.m. BST: weekly figures for US oil stocks