Gold and related ETFs were climbing toward record highs Wednesday as investors hedge against an uncertain outlook with a resurgence in coronavirus cases.
The SPDR Gold Shares (NYSEArca: GLD) increased 0.5% on Wednesday while Comex gold futures were 0.5% higher to $1,818 per ounce.
Gold has pushed above $1,800 per ounce on Wednesday for the first time since 2011 after surging 40% over the past 14 months, and the precious metal is nearing its previous 2011 record high of $1,920.3 per ounce, Reuters reports.
“We’ll be challenging the $2,000 level by the end of the year,” Ross Norman, an independent analyst, told Reuters. “We are in a bull market for gold.”
The ongoing economic and political uncertainty, along with rising inflationary risks associated with the unprecedented stimulus measures, have fueled the rally in the safe-haven asset.
Along with lingering uncertainty over the coronavirus outbreak and the length of the economic recovery, investors are still faced with rising political risk from the upcoming presidential election.
Meanwhile, the copious amounts of both fiscal and monetary stimulus measures have inundated the markets with cash and fueled fears of inflation while the near zero interest rates have lowered the appeal of government bonds. Consequently, more are looking at gold as a more attractive play.
“Western investment has been the key factor supporting prices (and) there’s no reason for that to stop,” StoneX analyst Rhona O’Connell told Reuters.
For instance, physically backed gold ETFs have added 734 metric tons of gold worth $39.5 billion over the first half of the year as more investors turned to the relatively easy-to-use investment vehicle to gain gold exposure. The sudden spike in interest for gold ETFs was more than in any previous full year and nearly half of all the gold mined during the period, according to the World Gold Council.
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