Gold price surges to fresh record highs on coronavirus concerns

Gold price surges to fresh record highs on coronavirus concerns
Written by:
Michael Harris
3rd August, 11:40
  • Gold prices print a new record high at $1,987.95/oz during the Asian trading session
  • Concerns over the economic spinoff due to an increase in the number of new coronavirus cases are rising
  • The yellow metal investors seem determined to push prices towards the psychologically-important $2,000/oz mark

Gold prices have continued its impressive bullish run to print a new record high at $1,987.95/oz. The yellow metal has been an attractive option for investors as the U.S. dollar hits multi-year lows. 

Fundamental analysis: Nearly 18 million confirmed COVID-19 cases

Gold prices hit a fresh all-time high today thanks to rising concerns over the economic spinoff due to an increase in the number of new coronavirus cases, which turned investors’ attention towards gold. However, the metal’s gains were capped following a relief rally in the U.S. dollar on Friday.

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Spot gold surged to an all-time high of $1,987.95/oz in Asian trade, while U.S. gold futures climbed 0.3% to $1,992.10.

“The sentiment across markets is deteriorating. First of all, rising infection rates are a real concern for the globe and a real support for gold prices. Given that, it is also driving U.S. dollar higher,” said Michael McCarthy, CSO at CMC Markets.

The number of new COVID-19 cases continues to rise in the US, while the global figure is more than 17.96 million. Increasing coronavirus cases and rising tensions between the U.S. and China have slowed down the economic recovery, boosting the demand for safe-haven investments like gold, which surged 30% year-to-date. 

“Gold also saw safe-haven demand as the federal unemployment bonus expired on Friday, which would affect U.S. consumer income and spending and the U.S. Central Bank would thus remain dovish,” analysts at Phillip Futures stated.

United States legislators tried to work out a new stimulus package, however, Mark Meadows, Chief of Staff at the White House, said yesterday he was not optimistic about the new coronavirus recovery plan in the short run. 

On Friday, the dollar index climbed 0.3%, capping gold’s gains.

Technical analysis: Fresh record highs set

Gold prices have edged higher as soon as the new weekly trading session began today. The yellow metal investors seem determined to push prices towards the psychologically-important $2,000/oz handle. 

Gold spot prices weekly chart (TradingView)

This is also where the 127.2% Fibonacci extension – of the 2012-2015 retracement in gold prices – is located. A tag of this level is likely to facilitate a retreat on profit-taking. The key short-term support is located around $1,920/oz, the former multi-year high. 

Gold prices are trading around 30% higher in 2020.

Summary

Gold prices reached an all-time high on Monday on the rising number of new COVID-19 cases. The metal is up 30% year-to-date but may see a potential correction as soon as it tags the $2,000/oz. 

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