Gold nears highest level since 2012 on coronavirus second-wave concerns

The precious metal climbed as much as 0.9 per cent to $1,758.83 an ounce on Monday

A jeweller, wearing a face mask and latex gloves due to the COVID-19 coronavirus pandemic, showcases bars of gold at a shop at the Dubai Gold Souk in the Gulf emirate on May 13, 2020, as markets re-open amidst an easing of pandemic restrictions. Evening dresses made of gold mesh, gilded sunglasses and glittering crowns are sparkling again from the windows of Dubai’s historic gold souk which was shuttered during the coronavirus lockdown. Though customers are still missing, for business owners, the reopening of one of the world’s biggest gold markets is a vital move towards normality ahead of the autumn tourist season, in a city that prides itself on shop-'til-you-drop experiences. / AFP / Karim SAHIB
Powered by automated translation

Gold pushed towards the highest level since 2012, lifted by concerns over a second wave of coronavirus infections and growing uncertainty in Hong Kong after China released details of a proposed national security law.

Bullion was supported as cases across the US Sun Belt surged, while Germany’s infection rate rose, and Australia’s second-most populous state, Victoria, tightened controls following a spike in cases. Meanwhile, China confirmed the proposed national security law would allow Beijing to override Hong Kong’s legal system, likely adding to tensions with the US.

Gold is up 15 per cent this year, buoyed by unprecedented stimulus to aid the global economy hurt by the coronavirus-related lockdowns. The metal continues to garner positive commentary, with Goldman Sachs Group forecasting it will hit a record $2,000 an ounce, while JP Morgan Chase said investors should stick with bullion as it’s most leveraged to a low real-yield environment.

“Markets have been optimistic lately, looking through poor data and newsflow and betting on a strong recovery, but the one thing markets wouldn’t be able to ignore is economies stalling again and the threat there is a second round of lockdowns,” said Sean MacLean, research strategist at Pepperstone. “Then we have that proposed national security law, which is dangling bait for the Trump administration to bite at.”

Spot gold climbed as much as +0.9 per cent to $1,758.83 an ounce, and was at $1,756.30 at 07:12pm in the UAE. Prices touched $1,765.43 on May 18, the highest level since October 2012.

Total known holdings in bullion-backed exchange-traded funds rose by almost 30 tonnes on Friday, according to initial data compiled by Bloomberg. Of that inflow, 23.1 tonnes went into SPDR Gold Shares, the most in a year in tonnage terms.

In other precious metals, silver climbed 1.5 per cent, platinum gained 0.6 per cent, and palladium added 0.2 per cent.