Gold prices hit fresh 7-year highs on rising coronavirus infections
- Gold prices printed fresh multi-year highs at $1,789 an ounce
- There is more than 11 million registered COVID-19 infections in the world, according to WHO
- The surge in the number of new cases has placed fresh doubts over a quick economic recovery
Gold prices rose to nearly $1,790 an ounce for the first time since 2012. Investors have turned to the yellow metal amid the surge in new coronavirus cases worldwide.
Fundamental analysis: Record daily increase in new infections
Fresh concerns over the rising number of new COVID-19 infections worldwide have facilitated a higher interest in safe-haven assets. The demand for the yellow metal has surged after the world witnessed the highest number of new infections in a single day.
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On Friday, the number of infections rose over 11 million, with more than half a million dead. In the United States, the number of daily infections is now comfortably above 50,000. Yesterday, the U.S. Centers for Disease Control and Prevention (CDC) has said that 57,718 new coronavirus cases.
The surge in the number of new cases has placed fresh doubts over a quick economic recovery.
“The sustainability of the recovery following the initial rebound remains an open question as Covid-19 cases re-accelerate and a fiscal-support cliff looms,” Bloomberg economist Eliza Winger said.
“Consumer sentiment and spending could be at risk of stalling.”
The demand for gold is still there, despite the reported plunge in interest for the yellow metal in China.
“We expect the U.S. and European investors to remain interested in gold regardless of Asian demand,” said Darwei Kung, head of commodities and portfolio manager at DWS Investment Management Americas Inc.
“If the buying pattern were to go up as well for China and India at the same time as what you see in the ETF market, then the price would have come up even further.”
Technical analysis: Fresh multi-year highs
Gold prices printed $1,789.15 an ounce on Monday, the highest the yellow metal has traded since 2012. The buyers will target the 2012 highs next near the $1,795 mark.
Last month, Invezz reported that gold prices could extend a bullish run after a brief consolidation period. The bulls were boosted by a break of the ascending triangle’s resistance around $1,745 an ounce.
If the run extends further higher, then the measured target for the ascending triangle is set at $1,820. This will largely depend on the situation related to COVID-19. A fresh rise in new cases would facilitate another wave of buying interest in gold.
Gold prices are trading near multi-year highs after a surge in the new COVID-19 cases increased the demand for the yellow metal. The buyers are now likely to target $1,795 an ounce first, before pushing for a move to $1,820 an ounce.