Gold prices firmed near an eight-year peak on Wednesday, as the metal’s safe-haven demand was boosted by worries about the global economic impact of surging coronavirus infections around the world.
Spot gold was up 0.1% at $1,782.67 per ounce by 0336 GMT, after hitting its highest since early October 2012 at $1,785.46 in the previous session. U.S. gold futures were steady at $1,800.60.
“The clear driver is the huge amount of funds being injected into the global monetary system. All of that money needs to find a home and gold market is seen as a safer place for investors to be putting that money to work,” said Michael McCarthy, chief strategist at CMC Markets.
Fresh U.S. coronavirus cases could more than double to 100,000 per day if the current surge spirals further out of control, the government’s top infectious disease expert warned on Tuesday.
U.S. Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell pledged to do more for the economy as it battles the virus outbreak, which has infected more than 10.48 million people worldwide so far.
Gold tends to benefit from widespread stimulus measures from central banks because it is widely viewed as a hedge against inflation and currency debasement.
“However, what’s holding back gold today is the risk-on sentiment and the dollar has not convincingly weakened against the euro. Once that happens, gold would start really making some headwinds towards $1,800,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.
Strong economic data provided some relief to nervous investors, which buoyed risk appetite in Asian share markets.
Spot gold may test a resistance at $1,789 per ounce, a break above which could lead to a gain into $1,795-$1,806 range, said Reuters technical analyst Wang Tao.
Palladium fell 0.6% to $1,918.83 per ounce, while platinum rose 1.4% to $825.12 and silver gained 0.7% at $18.25.