Gold breaks $1,900 per ounce barrier as China-US row drives flight to safety

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Gold is set to notch its seventh consecutive weekly advance, extending its climb after seven straight quarters of gains.
Gold is set to notch its seventh consecutive weekly advance, extending its climb after seven straight quarters of gains.

Dubai - In yet another escalation, China ordered the United States to close its consulate in the city of Chengdu.

By Reuters

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Published: Sat 25 Jul 2020, 2:56 PM

Last updated: Fri 31 Jul 2020, 9:59 AM

Safe haven gold pierced the $1,900 per ounce ceiling on Friday for the first time since 2011 as a worsening US-China row added to fears over the hit to a global economy already reeling from the coronavirus pandemic.
Spot gold climbed 0.9% to $1,902.99 per ounce by 10:47 a.m. ET (1447 GMT), having earlier hit its highest since September 2011 at $$1,905.99.
US gold futures rose 0.6 per cent to $1,901.00 per ounce."Concerns about more global economic slowing due to the increasingly acerbic US-China spat is seen as likely to keep global government and monetary support going even longer," said Tai Wong, head of base and precious metals derivatives trading at BMO.
In yet another escalation, China ordered the United States to close its consulate in the city of Chengdu, responding to a US demand for China to close its Houston consulate.
This hammered risk sentiment and sent the dollar index to a two-year trough.

Further bolstering bullion's appeal was the constant surge in COVID-19 cases, with the US tally crossing over 4 million on Thursday and global cases breaching 15.58 million.

If the economy does not show "quality signs" of improving, gold could clear $1,922 and continue towards $2,000, said independent analyst Ross Norman.

Non-yielding gold has surged 24% this year, underpinned by low interest rates and stimulus from central banks, which benefits bullion since it is a perceived hedge against inflation and currency debasement.

However, Commerzbank analysts said the rise in gold and silver had happened "possibly too quickly," adding in a note that this entailed "the risk of a setback, especially as gold and silver are being driven almost exclusively by extremely strong investment demand".


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