Precious Metals ETFs Strengthen as Coronavirus Cases Spike

Precious metals-related exchange traded funds led the charge on Friday as surging coronavirus cases fueled safety bets in case more states reinstate shutdown measures to quarantine another outbreak.

Among the best performing non-leveraged ETFs of Friday, the ETFMG Junior Silver Miners ETF (NYSEArca: SILJ) advanced 4.0%, VanEck Vectors Gold Miners ETF (NYSEArca: GDXJ) increased 3.9%, Global X Silvers Miners ETF (NYSEArca: SIL) rose 3.5% and VanEck Gold Miners ETF (NYSEArca: GDX) gained 2.8%.

Meanwhile, the SPDR Gold Shares (NYSEArca: GLD) was 0.8% higher and the iShares Silver Trust (SLV) was up 1.5% as Comex gold futures pushed 0.6% higher to $1,811.5 per ounce and Comex silver futures increased 0.9% to $19.8 per ounce.

Gold was on pace for its sixth consecutive weekly gain on Friday after a record-breaking spike in new Covid-19 cases across the United States added to uncertainty over the economic recovery, Reuters reports.

The United States broke another daily record for coronavirus infections, causing some states to impose partial lockdowns in a bid to contain the new hot spots.

“As long as we don’t have a vaccine, we will continue to have these problems… We could see a push towards $2,000 before the end of this year,” Afshin Nabavi, senior vice president at precious metals trader MKS SA, told Reuters.

Precious metals have also been enjoying demand as a hedge against rising inflation expectations with the Federal Reserve writing a blank check to support market liquidity and economic growth while the U.S. government eyes another round of fiscal stimulus measures to support the working-class Americans.

“Negative real interest rates, ballooning central bank balance sheets, weaker U.S. dollar and still-rising COVID-19 cases are enhancing the safe-haven appeal of the yellow metal,” ANZ commodity strategist Soni Kumari told Reuters. “Now, escalating tension between the U.S. and China is another tailwind for the market.”

Heightened tensions between the United States and China are also some to hedge more with gold in fear of another trade war that could stifle the global economic recovery. The Trump administration was considering banning travel to the United States for all members of the Chinese Communist Party.

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