Economy

Gold Nears $1900 as Veteran Mobius Says Keep Buying

Gold Nears $1900 as Veteran Mobius Says Keep Buying”

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

"I would be buying now and continue to buy", said Mobius, who is the founder of Mobius Capital Partners.

After over nine years, gold prices hit Rs 50,000 per 10 grams on Wednesday in India the worlds second-largest gold consumer after China as a host of factors like global uncertainties triggered by Covid pandemic, weak dollar, low-interest rates and stimulus programmes have increased the appetite for gold.

Gold has been helped by a weak dollar, which remained in the doldrums near more than four-month lows on Thursday, easing 0.16% to 94.860. The yellow metal breached the $1,900-mark globally and was trading at $1,902.93 an ounce (until 8.34 pm IST) - almost $3 more than the record closing of 1,900.2 nine years ago on September 5.

Spot silver was steady at 22.60220z, The Devil's Metal poised for the biggest weekly advance since Y 1980.

Spot gold was up 1.2% to $1,893.71 per ounce by 11:34 a.m. ET (1533 GMT), having hit its highest since September 2011 at $1,894.53.

As gold prices surge, investor Mark Mobius said he would continue buying the yellow metal. The precious metal has always been a go-to investment during times of fear and uncertainty, which tends to go hand in hand with economic recessions and depressions.

The 10-year Treasury note fell 1.4 basis points to 0.5807%.

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While spot gold prices are about $40 away from the all-time high, some futures contracts on the COMEX are already trading even higher.

December surpassed August as the contract that has the highest open interest based on data published when July 24's Asian trading session was already happening. That's above the record for the most-active contract of 1,923.70 reached in September 2011.

On the geopolitical front, Secretary of State Michael Pompeo cast China's leaders as tyrants bent on global hegemony. His comments came after the USA unexpectedly ordered China to close its consulate in Houston, following what it said were years of espionage directed from the diplomatic compound.

Investors' are looking at the prospect of more fiscal and monetary policy measures as the path to economic recovery remains cloudy.

In currency markets, the euro was up 0.2% to $1.1592 as it rode the European Union approval on Monday of a 750 billion euro recovery fund to revive the region's coronavirus-hit economies.

The Federal Reserve meets in the coming week to determine whether more accommodation is necessary. For instance, many investors think of gold as an inflation hedge which has some common sense plausibility as paper money loses value as more is printed, while the supply of gold is relatively constant.

The US-China row put copper ― a prime Chinese import ― on track for its first weekly loss since mid-May, but analysts expect recovering demand and low stocks to keep prices high. "It's not good for us, it's not good for anyone else".

Equities have rallied to their strongest since February, with many country indices erasing their slump in March when the coronavirus pandemic sent markets into free-fall.



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