Gold bullion and related exchange traded funds are on pace to end at all-time highs as investors turned to hard assets to safeguard their wealth.
Meanwhile, the SPDR Gold Shares (NYSEArca: GLD) was up 1.0% as Comex gold futures pushed 1.0% higher to $1,883.1 per ounce.
Gold futures briefly crossed over their August 2011 closing record of $1,891.9 on Thursday but were still short of their intraday record of $1,923.7 after surging almost 25% this year, the Wall Street Journal reports.
The Coronavirus pandemic has helped fuel the rally in precious metals. Despite the strong rebound in risk assets since the March lows, many investors remain concerned about the economic outlook with no viable Covid-19 vaccine ready for wide distribution.
“It is a historic moment…This could be longer lasting because of the pandemic,” George Gero, a gold trader for more than 50 years now at RBC Wealth Management, told the WSJ. “There is a lot of momentum, and the momentum traders who say ‘The trend is my friend’ are buyers.”
Many prominent investors including Ray Dalio, Jeffrey Gundlach, and Paul Tudor Jones have extolled the benefits of gold in recent months as the global pandemic pummeled business activity across the globe and world governments print money to spend the problem away.
“We’re basically in brand new territory. No one knows how all this is going to shake out,” Tim Courtney, Chief Investment Officer of Exencial Wealth Advisors, told the WSJ.
The ultra-low interest rates and aggressive stimulus measures from world central banks and governments are also fueling the increased demand for hard assets like gold bullion. Low rates make owning gold more attractive for investors because the metal does not suffer much of an opportunity cost as an alternative to safe-haven government bonds in a low-yield environment. Meanwhile, some traders anticipate that the heavy government spending spree to support the economy could cause a spike in consumer prices that outpaces any interest-rate increases.
Furthermore, ongoing global risks, such as the rising geopolitical tensions between the U.S. and China, border conflicts between China and India, and deteriorating relations between North and South Korea are adding to the risk-off safety play.
“There are a lot of reasons why we think we gold is a prudent place to put some money,” Ellen Hazen, a portfolio manager at F.L.Putnam Investment Management, told the WSJ.
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