Gold rises near long-time high of $1,800 as U.S. dollar weakens
- 6th July 2020
- Posted by: Hakeem
- Category: Commodities
Gold futures rose even higher on Monday, led partly by a weakening U.S. dollar amidst rallies of global stocks. As measured by the ICE U.S. dollar index DXY, -0.37%, the U.S. dollar was off 0.4%. The implication of a weaker U.S. dollar is that assets that are priced in the currency will become more attractive to buyers that employ other monetary units.
Global stocks had rallied as a result of a surge in Chinese markets as Beijing’s state-run media put out a front-page editorial that encouraged investors to buy stocks towards supporting domestic markets. Yet, the increase in COVID-19 cases in the U.S has left investors unsure.
Adrian Ash, director of research at BullionVault explained that, “Bullion prices don’t typically jump because of social unrest or geopolitical strife. But if those stresses add to a financial crisis or economic slump, gold prices can spiral higher.”
For these reasons, gold futures in August rose $2.90, or 0.2%, at $1,792.90 an ounce, following the end of the most-active contract on Thursday according to FactSet data.
The price of gold had experienced a level of pressure, temporarily losing its gains which had risen as high as $1,799 a little after the economic data released Monday showed that the Institute for Supply Management’s index of nonmanufacturing companies increased to 57.1% in the month of June from the 45.4% attained in May. This was the single largest increase since the commencement of the survey as far back as 1997.
Ash noted that “It’s hard to see what stops gold reaching new highs from here.”