Gold has extended its rally – hitting a fresh record high – after soaring past the $2,000 (£1,523) an ounce mark for the first time in history as investors seek a safe haven.
Against the global market turmoil caused by the COVID-19 crisis, bullion has surged in value by more than a third so far this year and is one of 2020’s best performing assets.
Its attraction has been further fuelled by very low interest rates and widespread stimulus measures by global central banks to soften the economic blow of the coronavirus pandemic, sparking concerns over inflation and keeping bond yields historically low.
Image: Silver prices have also surged this year, outperforming even gold
After breaking above $2,000 for the first time, gold reached a new high of $2,041.33 (£1,553) an ounce on Wednesday.
Silver prices have also surged, jumping 3.2% to $26.84 (£21.95), the highest since April 2013.
The precious metal, which is both a safe-haven asset and widely used in industry, has now risen 50% this year, outperforming even gold.
With the coronavirus having now infected more than 18 million people worldwide and the outlook for the global economy remaining uncertain, many analysts think gold will rally further, with Bank of America predicting it could reach $3,000 (£2,283) over the next 18 months.
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Independent analyst Ross Norman said: “There’s a level of fear in the markets which is almost palpable.
“Momentum is feeding on itself, based upon real concerns about the failure of the macro economy to show any meaningful signs of recovery.”
Edward Moya, senior market analyst at broker OANDA, said: “The treasury market is strongly signalling that this lower interest rate environment is here to stay.
“In the last decade, treasuries always had the edge over gold but right now that’s not the case, we’re going to see investors’ primary focus be on gold.”
However, Carsten Menke, an analyst at Julius Baer, warned that the rally remains vulnerable to pullbacks.
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He said: “It’s clear for us that the insurance gold provides to an investor’s portfolio has become very expensive and that the market at current levels is suited for short-term traders rather than safe-haven seekers.”
Technical analysts also warn gold needs a period of consolidation.
Elsewhere, platinum and palladium – a rare metal used in industry as well as dentistry and jewellery – also saw rises.
Source : Sky News