(Bloomberg) — Gold surged to a fresh record Friday fueled by a weaker dollar and low interest rates. Silver headed for its best month since 1979.
Spot bullion is up 11% in July, heading for its best month in eight years, as a gauge of the dollar slumped, prompting concerns its status as the world’s reserve currency of choice is at risk, and U.S. real yields fell to a record low. While the ferocity of rallies in both gold and silver cooled in the middle of the week, most market watchers predict there may be more gains ahead.
Both metals are headed for their biggest annual gain in a decade, with record inflows into gold and silver exchange-traded funds, as concern about the fallout from the coronavirus pandemic boosts demand for havens. The Federal Reserve this week repeated a vow to use all its tools to support the U.S. economy, with governments and central banks worldwide already unleashing vast amounts of stimulus to shore up growth.
Silver is also getting added support from investors betting on a rebound in industrial demand amid concerns over supplies.
Spot gold rose as high as $1,983.36 an ounce early Friday — a fresh record — and was trading up 1% at $1,976.71 an ounce at 9:40 a.m. in London. Comex gold futures hit $2,005.40.
Spot silver advanced 2.9% to $24.1679 after a three-day pause in its rally, while the Bloomberg Dollar Spot Index was down 0.1%, extending this month’s tumble.
“We remain bullish with gold and silver and would not be surprised to see a speculative bull run on silver,” Frederic Panizzutti, managing director at MKS Dubai “Gold at $2,000 would put silver at around $30.”
Gold traders on Thursday declared their intent to deliver 3.3 million ounces against the August Comex contract, the largest daily delivery notice in bourse data going back to 1994.
With more stimulus on the horizon, Goldman Sachs Group Inc. has said that gold is the currency of last resort amid an inflation threat to the dollar. The bank forecasts a rally to $2,300. Bank of America Corp. says prices could soar to as high as $3,000 an ounce, while JPMorgan Chase & Co. sees the rally losing steam later this year.
“There is still plenty of upside left in this rally,” Australia & New Zealand Banking Group Ltd. said in a note. “The backdrop remains highly conducive, with unwavering support from central banks likely to see monetary easing policies remain in place for the foreseeable future. This will keep bond yields low, raise inflation expectations and potentially keep the U.S. dollar weak.”
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