Category: Market News

(Bloomberg) — Traders are abandoning bearish bets on gold as the yellow metal surges to all-time highs.

Short interest as a percentage of shares outstanding on the $75 billion SPDR Gold Shares exchange-traded fund, ticker GLD, is near the lowest level since July 2009, according to data from IHS Markit Ltd. Meanwhile, bullish call option volume in the ETF posted its second-biggest jump ever last week before bullion climbed to a record $1,946 per ounce Monday.

What began as a haven bid amid the coronavirus pandemic has been kicked into overdrive by central bank stimulus as slumping real interest rates — which strip out the effects of inflation — drive investors into gold. The bullish momentum along with a tumbling dollar has fueled “stunning” speculation in precious metals, according to analysts at Sundial Capital Research Inc.

“The popular narrative is that government monetary support will lead to inflation and currency debasement, so buy precious metals as a hedge,” Sundial’s Troy Bombardia wrote in a note Monday. “Regardless of whether this theory is right or wrong, the fact remains that traders are full-bore bullish on metals.”

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The slump in the US dollar is beginning to accelerate. The gold price leapt to a new all-time high in early trading on Monday 27 July, with silver and bitcoin also seeing strong price rises.

Gold hit a new record price of $1940 per troy ounce in Asian trading, exceeding the previous all-time high of $1922, set on 6 September 2011. Silver rose to $24.10 a troy ounce, up over 6 percent from Friday’s close, while bitcoin broke through the $10,000 mark, up over 7 percent from levels set on Friday.

According to precious metals commentator Ross Norman, the jump in the price of hard assets shows general investor nervousness about the prospects for financial markets.

“What gold and silver are telling us is that the macro and geopolitical environments are deeply unattractive,” he told New Money Review.

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• Gold powers to an all-time high
• The stars are aligned for gold prices to continue to rise
• A lower dollar, aggressive monetary policy easing, ultra-low interest rates, negative US real yields, fiscal stimulus and the technical outlook all support gold prices
• Nonetheless, positioning does remain extreme which could encourage volatility

Introduction – Will gold break records?

On 9 July we released our Gold Watch – Gold gains from global stimulus measures. In this report we revised our gold price forecasts because the crucial technical resistance at USD 1,800 per ounce was taken out. Today the all-time high at USD 1,921 from 6 September 2011 was taken out. What do we expect going forward?

Stars aligned for gold price rises

The stars are aligned for gold prices and a test of the psychological level of USD 2,000 is within reach now. There are several reasons for this.

Firstly, since the start of July the US dollar has declined. For a start a more constructive sentiment on financial markets has resulted in lower safe haven demand for the dollar. In addition, investors shy away from the dollar because of the tensions between the US and China and the Presidential elections. Moreover, the handling of the COVID-19 situation in the US has weighed on the US dollar. Finally, the monetary policy easing by the Fed is a crucial driver of dollar weakness.

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* Gold up more than 4% so far this week

* Silver slips, but headed for best week in over three decades

* Dollar index near two-year low, equities retreat (Recasts, adds comments, updates prices)

By Eileen Soreng

July 24 (Reuters) – Gold resumed its march toward $1,900 on Friday as an escalation in the U.S.-China spat added further safe-haven fuel to a rally to a nine-year peak driven by fears over the economic hit from the coronavirus pandemic.

Silver, meanwhile, was en route to its best week since 1987.

Spot gold was up 0.3% at $1,892.32 per ounce by 1002 GMT, having hit its highest since September 2011 at $1,897.91 on Thursday.

U.S. gold futures rose 0.1% to $1,890.90.

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Most-active gold contract nears all-time high, as front-month contract scores a record

The gold market saw a lot of excitement on Thursday, with its climb over the last five sessions in a row ultimately lifting prices into record territory.

“Ordinarily this is the quiet time for gold—summer doldrums,” said Ross Norman, chief executive officer of precious metals news and information provider Metals Daily. “Well, not this year.”

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