Gold Breaks $1800 In Biggest Quarterly Gain Since 2016

By Glenn Dyer | More Articles by Glenn Dyer

Gold futures topped $US1,800 an ounce on Tuesday for the first time since 2011, driven by growing uncertainty about the spread and renewed impact of the coronavirus pandemic on US economic activity and the country as a whole.

At the forefront were investors looking for a haven investment in the midst of the continuing upturn in the pandemic and weak leadership from President Trump.

It was the 4th time this year that the Comex gold futures price had nudged the $US1,800 level. This time it managed to settle above that before drifting lower in after-hours trading to be around $US1,799 in early Asian trading Wednesday.

Copper and silver also rose and with gold ended higher for the quarter. Copper was down a touch for the half-year.

The current futures price is just over $US90 an ounce under the all-time high set in August 2011 of $US1,891 an ounce.

Rising numbers of new cases of COVID-19 in Florida, Texas, California and Arizona have raised concerns about the potential shape of the economic recovery from recession in the US and the rest of the world.

According to Anthony Fauci, director of the US National Institute of Allergy and Infectious Diseases, the daily surge in coronavirus cases in the US could more than double to 100,000 a day if Americans fail to take steps to get the virus under control.

He again said social distancing and the wearing of masks were a must but were not being observed.

Jeff Klearman, portfolio manager at GraniteShares told Marketwatch.com.“The demand destruction wreaked upon the U.S. and global economies and then the resulting unprecedented monetary and fiscal stimulus-response here and abroad is the primary driving force behind gold performance this year.”

“Ongoing uncertainty on the effects of the coronavirus on the U.S. and global economic recovery, increased stock market volatility, the upcoming U.S. presidential election, civil unrest in the U.S., global trade friction, along with the continuation of massive monetary and perhaps fiscal stimulus all provide strong support for gold prices.

He said there’s “very little reason to see gold prices move lower in the near future.”

Comex August gold jumped $US19.30, or 1.1%, to settle at $US,800.50 an ounce in New York. That was the highest finish for a most-active contract since September 2011. In August of that year, gold futures settled at a record $US1,891.90.

Comex gold futures rose just over 18% in the six months to June 30. For the June quarter, the commodity gained nearly 13% and it climbed almost 3% in the month of June.

Meanwhile, Comex September silver which is the most-active contract, rose 57 cents, or 0.6%, to $US18.637 an ounce. For the first six months of the year, Silver rose a more sedate 4% but surged nearly 32% over the quarter. It was up less than 1% in June.

Prices for the precious metals notched fresh intraday highs after New York fed President, John Williams said that the economy seems to be on the mend, but remains damaged. “The economy is still far from healthy and a full recovery will likely take years to achieve,” Williams said.

The market also heard testimony from Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin before the House Financial Services Committee on the risks to lifting restrictions on commercial activity against keeping the pandemic in check.

It’s a key question these days for American investors, companies, and the wider community, and the rising infection rates, especially among young people, is not making it any easier.

Elsewhere on Comex on the day, October platinum rose 2.8% to settle at $US851.20 an ounce, ending down around 13% year to date, while September palladium added 1.8% to $1,966.90 an ounce, up around 3% so far this year.

Comex September copper contract added 1.3% to $US2.7285 a pound, with prices up roughly 22% for the quarter but down around 2.4% so far this year.

Meanwhile a weaker US dollar has been helping gold and other commodities – it was only up around 1% for the June half-year.

The Aussie dollar ended June 30 around 69.05 US cents – down over the financial year by around 30 points, around steady for the half-year, but up nearly 8 US cents from the March 31 close of just over 61 cents. That’s a rise of more than 12%.

Iron ore prices fell over 2019-20 by more than 16% – from $US118.47 a tonne for 62% Fe fines delivered to northern China on June 28 (It was a Friday, June 30 was on a Sunday in 2019) to $US99.43 a tonne yesterday. The price was up nearly $US13 a tonne this quarter.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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