Euro, gold on a high as the USA dollar breaks down

Euro, gold on a high as the USA dollar breaks down”

In the global market, gold was quoting higher at $1,897 per ounce and silver was trading with marginal gains at $22.70 per ounce.

"There has been a turn in dollar sentiment", said Marc Chandler, chief market strategist at Bannockburn Forex in NY.

"Gold is high now because interest rates are low, lower than inflation and people want to put their money in something that is not devaluing".

Gold has been helped by a weak dollar, which remained in the doldrums near more than four-month lows on Thursday, easing 0.05 per cent to 94.965. "And there's no yield on treasuries right now, so gold is a safe spot given the circumstances of the central banks and the coronavirus". Spot silver advanced 0.5% to $22.7047 an ounce, and is poised for the biggest weekly advance since 1980. Prices had touched $1,898.34 on July 23 threatening to go for the record $1,921.17 hit in September 2011.

While spot gold prices are about $20 away from the all-time high, some futures contracts on the Comex are already trading even higher.

"When interest rates are zero or near zero; then gold is an attractive medium to have because you don't have to worry about not getting interest on your gold; and you see the gold price will rise as uncertainty in the markets is rising".

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However, the rise in gold and silver has happened "very quickly - possibly too quickly", Commerzbank analysts said in a note, adding this "entails the risk of a setback, especially as gold and silver are being driven nearly exclusively by extremely strong investment demand".

Gold's rally may extend into 2021 "on dollar wobbles amid rising geopolitical risks in a lower-for-longer interest-rate environment", Eily Ong, an analyst at Bloomberg Intelligence, wrote in a note. "I would be buying now and continue to buy, because gold is really on a run, it's doing well". That's above the record for the most-active contract of $1,923.70 reached in 2011.

The order came after what the United States officials said were many years of espionage; that are directed from the diplomatic compound against American commercial and national security assets.

China said the order was an "unprecedented escalation" by Washington, and a source said Beijing was considering shutting the USA consulate in Wuhan in retaliation.

But Europe's broad FTSEurofirst 300 index closed up a bare 0.08% as Wall Street struggled after data showed the number of Americans seeking unemployment benefits unexpectedly rose last week for the first time in almost four months.

Unprecedented stimulus measures to boost battered economies would continue to provide structural support for riskier assets, said Kay Van-Petersen, global macro strategist at Saxo Capital Markets in Singapore.

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