Gold ends above $ 2,000 for the first time in history as interest rates on US dollars and bonds fall
Gold futures soared higher Tuesday and accelerated late in the session to finish on a new high as government bond yields fell and the recent rebound in the US dollar declined somewhat, allowing the precious metal to attack a record close to the US dollar. threshold of $ 2,000.
The ongoing demonstration in gold has come as governments around the world flood their economies with financial aid to fight the COVID-19 pandemic. . And investors are betting that the upward trend for the yellow metal continues as the dollar weakens and interest rates remain around 0% in many parts of the world.
Analysts at BofA Global Research predict that the precious metal will rise 50% over the next 18 months to about $ 3,000 an ounce and that other precious metals will benefit in the COVID-19 environment.
“If you look at something [DXY, 10 year real yields] levels that we would need to see gold at $ 2500 an ounce, it’s combinations like the DXY at 90 and real rates at minus 2, ”said Michael Widmer, metal strategist in comments included in a Aug. 3 study note, citing a July 30 call with Widmer clients and commodity research analyst Francisco Blanch.
“That will cost gold up to $ 2500. The DXY at 85 and real rates at minus 1.75 will also take you to $ 2500. DXY at 80 and real rates at minus 1.5 will also bring it up to $ 2500 an ounce,” said Widmer, referring to bond yields and the ticker symbol for the ICE US Dollar Index DXY,
or DXY, a measure of the dollar against half a dozen major currencies.
The DXY stood at 93,387 on Tuesday, down less than 0.1%, which weakened from a slightly firmer greenback rise earlier in the session and provided tailwind for precious metals priced in the currency. Assets pegged to US dollars often weaken in price as the dollar strengthens as it makes those commodities more expensive for foreign buyers. Meanwhile, the 10-year Treasury bill yields TMUBMUSD10Y,
maintained at about 0.52%, at 4.4 basis points on the day.
On Tuesday December December GCZ20,
rose $ 34.70, or 1.7%, against $ 2,021 an ounce, after gains of less than 0.1% on Monday and a modest increase on Tuesday.
Commodity experts say investors are watching the Federal Reserve for new signs of monetary stimulus as Congress lawmakers debate a further fiscal coronavirus package in the US that could catalyze the next step in gold, said Carlo Alberto De Casa , lead analyst at ActivTrades, in a note.
“Clearly, the USD 2,000 resistance level is a strong barrier to the price and significant volumes are being placed,” he wrote. “Any news of new monetary stimulus from the US Federal Reserve could cause gold to breach the USD 2,000 resistance level.”
September silver SIU20,
Meanwhile, out-of-pocket expenses soared higher, rising $ 1.61 or 6.6% to end at $ 26,028 an ounce after the product surged 1% a day ago.
In other Comex metals, September copper HGU20,
lost 1.75 cents, or 0.6%, to $ 2.8945 per pound. Platinum PLV20 from October,
rose $ 24.10, or 2.6%, to settle at $ 955.20 an ounce, while Palladium PAU20 in September,
won $ 31.10, or 1.5%, to finish at $ 2,170.60 an ounce.