On the physical market, the price of an ounce of gold rose by 0.6 percent to $1,778.20, the highest level since October 2012. In the U.S. market, the price of gold in futures contracts increased by 0.7 percent to $1,794.30 per ounce.
Demand for the precious metal was fueled by concerns over the frequent new cases of coronavirus infections. Tokyo reported the highest number of newly registered cases in a single day since May 5, while Germany reported 712 new cases.
In the U.S., the number of new cases jumped by 25 percent last week, and in Latin America, the number of deaths related to Covid-19 surpassed 100,000, according to Reuters’ calculations and analysis. Leading U.S. virologist Dr. Anthony Fauci stated yesterday in Congress that the next two weeks will be crucial for efforts to maintain control over the spread of the virus.
Meanwhile, media reports indicated that the European Union is considering a ban on entry for U.S. citizens when borders reopen on July 1.
– “Everyone is afraid of a second wave of coronavirus infections, not just in the U.S., but also in Latin America, Brazil, and Russia, and this supports the surge in gold prices” – explains Jigar Trivedi from the Indian brokerage firm Anand Rathi Shares.
– “People expect central banks to adopt stimulus packages, and the higher their value, the better the prospects for gold” – adds Trivedi.
Central banks around the world have already increased the value of stimulus measures while keeping key interest rates low to mitigate the pandemic’s impact on the economy. In such an environment, investors seek to hedge against rising inflation and currency devaluation, leading to increased purchases of gold, whose price has risen by more than 16 percent this year.
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