For a variety of reasons, gold hit a series of highs on Monday across trading in Asia, Europe, and the US where it settled at an all-time record level.
The reasons for the surge ranged from the continuing advance of COVID-19 in the US and now Europe, to rising tensions between China and the US, to growing fears about the strength of economic recoveries around the world.
And there’s the one most ignored outside the market – the slide in the value of the US dollar to its lowest level in two years.
While some analysts blame that on the rising tensions with China (helping boost the euro especially, but also other currencies such as the Aussie dollar), there are also growing worries about the political stability of the US with a volatile Donald Trump already making clear he will not automatically accept the results of the November 3 poll.
For that reason alone, the dollar is likely to remain flighty until the end of the year, investors will seek safe havens in non-greenback currencies and prices of commodities (and equities) will remain volatile.
Wednesday’s Fed meeting is also occupying minds, along with some key earnings reports on Thursday (US time) from Apple, Amazon, and Alphabet (Google).
While Wall Street ended in the green on Monday, gold held centre stage.
Gold futures climbed past $US1,900 an ounce on Monday to their highest settlement and intraday levels on record.
Comex August gold rose $US33.50, or 1.8%, to settle at $US1,931 an ounce after trading as high as $US1,941.90.
The settlement topped the previous record of $US1,897.50 on Friday. Monday’s close also topped the previous intraday record of $US1,923.70 from September 6, 2011.
Last week, prices rose 4.8%, the biggest weekly percentage climb since the week ended April 9 and some analysts say the never-before-seen level of $2,000 an ounce is now within reach.
Prices are up by close to $US600 from the lows of March
The US dollar index fell nearly 0.9% to 93.64, having lost 3.9% in July so far. The index is at its lowest since 2018.
The Aussie dollar traded around 71.50 at 7 am Sydney time on Tuesday. That’s a new 2020 high and means the currency has rebounded 25% from the lows of 57.85 in late March.
Meanwhile, Comex September silver contract jumped $US1.65, or 7.2%, to settle at $US24.501 an ounce- the highest active contract settlement since August 2013, according to FactSet data.
Comex September copper though was quieter, edging up 0.2% to $US2.8975 a pound.
Iron ore prices eased with 62% Fe fines delivered to northern China losing $US1.71 to $US107.68 a tonne.
Against that backdrop, West Texas Intermediate crude for September delivery rose 31 cents, or nearly 0.8% on Monday in New York, to settle at $US41.60 a barrel, after trading down to $US40.48.
September Brent crude, the global benchmark, also edged up by 7 cents, or 0.2%, to $US43.41 a barrel in Europe.
On Wall Street, the Dow closed 114.88 points higher, or 0.4%, at 26,584.77, while the S&P 500 was up 23.78 points, or 0.7%, to finish at 3,239.41.
The Nasdaq led the market’s gains on Monday, ending 173.09 points higher, or 1.7%, at 10,536.27. That was after Friday’s fall and back to back weekly losses.
The ASX 24 trading has the local market in line to open about 30 points higher today after the ASX 200 rose 20 points or 0.34%, to 6,044 on Monday.
