Gold topped $1,600 on Tuesday, the highest level seen since 2013. Investor worries about the coronavirus weighed in as the epidemic has placed pressure on the stock market and investors are seeking safe havens.
Carsten Fritsch, a Commerzbank analyst, said: “Gold is finding buoyancy from increased risk aversion, as reflected also in falling stock markets and declining bond yields. The gold price is continuing to defy the firm U.S. dollar, which on a trade-weighted basis is priced at a 4 ½ month high.”
Gold tapped out at a high of $1,601.40 an ounce, its highest level since April 2013. Silver was also 1.7 percent higher by 29.6 cents, or at $18.03 an ounce.
Peter Spina, GoldSeek.com’s CEO, said: “There is a good set-up for gold going into this and next week on the $1,600+ breakout and swing point.” Spina suggested that gold prices could end up even higher, “with $1,700 to $1,900 coming in play over the coming months.” Spina also added that if the trend fails to breakout, more months might consolidate around $1,500.
Spina believes there are good signs, however. Spina said that 100 percent of the U.S. Treasury yield curve is now negative-yielding when inflation is taken into account. “Negative real yields with falling rates is more fuel to gold prices heading, eventually, to record highs,” he said.
While gold headed northward, benchmark stock indexes in the U.S., as well as global equities, headed south on Tuesday. Apple acknowledged that the coronavirus outbreak in China would negatively impact its second-quarter earnings.
Bond yields were also down. Ten-year U.S. Treasury notes fell 2.4 points to 1.563 percent. When yields are lower, it makes gold a more attractive haven for investors.
However, since the U.S. dollar is relatively strong, it might limit gold gains. The ICE U.S. Dollar Index rose by 0.3 percent up to 99.319.
Meanwhile, copper sneaked up a bit by 0.7 percent to $2.617 per pound. Palladium also rose 7 percent to a record of $2,478.30 an ounce, while Platinum saw 2 percent gains at $988.50 an ounce.