The gold price rallied again in spectacular fashion on Tuesday, as panicked investors scrambled for hard assets on the back of COVID-19 closures of mines and refineries and unprecedented monetary action by the U.S. central bank.
On the Comex market in New York, gold for delivery in April, the most active contract, closed the session at US$1,660 per oz., up US$93 compared to Monday’s close. Earlier in the day, the metal rocketed by as much as US$131 per oz., or 8.4%, to just shy of US$1,700 per ounce.
Tuesday’s surge beat yesterday’s record-setting one-day gain by a handy margin and brings gold’s gains so far this week to US$150 per ounce.
Reuters quoted Goldman Sachs on Tuesday as saying inﬂationary concerns triggered by the central bank policy response to the coronavirus outbreak should underpin gold prices this year as the “currency of last resort.”
“Combined with the fiscal nature of the current policy response to COVID-19, we believe physical inflationary concerns with the dollar starting near an all-time high will for once dominate financial asset inflation that was a feature of the past decade.”
CIBC analysts led by Anita Soni agreed that recent market events have created a buying opportunity for gold equities.
“Near-zero interest rates, market uncertainty and ongoing liquidity injections provides a bullish setup for gold and silver,” Reuters quoted her as saying. This has created an “excellent opportunity to buy the dip across the sector.”
Gold has been on a wild ride over the past weeks, dropping as low as US$1,450 per oz. a week ago after briefly hitting a seven-year high above US$1,700 a week earlier.