LONDON • Gold's spot and futures prices opened the week by hitting record highs, with the metal for immediate delivery closing in on US$2,000 an ounce as the search for safe-haven assets continued amid the coronavirus pandemic.
Spot bullion surged 11 per cent last month, the biggest monthly gain since 2012, as investors weighed a weaker US dollar and record low real yields in the United States. Strategists are now considering alternatives to government debt, such as cash, credit, dividend shares and gold.
RBC Capital Markets said gold seems like a "freight train" as investors have gone "haven hunting".
The Covid-19 crisis has prompted unprecedented amounts of stimulus being unleashed to shore up economies, including lower rates, which are a boon for non-interest-yielding gold.
Simmering geopolitical tensions are also boosting demand - US Secretary of State Mike Pompeo said the Trump administration will announce measures shortly against "a broad array" of Chinese-owned software deemed to pose US national security risks.
"The fall in US 10-year real yields was the most important driver in our view given the strong inverse relationship," Commonwealth Bank of Australia analyst Vivek Dhar said in a note. "Safe-haven demand primarily reflected global growth concerns linked to rising Covid-19 cases around the world and escalating US-China tensions."
Spot gold rose as much as 0.6 per cent to US$1,988.40 an ounce, while most active futures traded as high as US$2,009.50 on the Comex.
Global Covid-19 cases have surpassed 18 million as the pandemic is now adding a million infections every four days.
Australia's Victoria state tightened restrictions and declared a state of disaster, while the Philippines reimposed a lockdown in Manila. Federal Reserve Bank of Minneapolis president Neel Kashkari suggested a lockdown of four to six weeks for the US.
More gains are seen for gold as the path to economic recovery remains uncertain.
RBC Capital Markets said prices may top US$3,000 should the global situation deteriorate materially, with that outlook representing its bull-case scenario, which has a 40 per cent probability. In its base-case view, which has 50 per cent odds, prices will pass US$2,000 in the coming quarters.
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