Gold Off Seven-Year High

Gold Off Seven-Year High

Gold off seven-year high on profit taking as investors turn hopeful eyes to latest vaccine news. Gold had climbed to the highest level in more than seven years earlier Monday after Federal Reserve Chairman Jerome Powell said the economic downturn triggered by coronavirus-related lockdowns could last through the end of next year.

This morning’s positive announcement by Moderna has driven the U.S. stock market to a strong opening, with the Dow up 700 points. The biotech company’s closely watched early-stage human trial for a coronavirus vaccine produced Covid-19 antibodies in all 45 participants, sending the company’s shares surging more than 17%.

In an interview with the CBS program “60 Minutes” broadcast Sunday night, Powell said peak U.S. unemployment of 20% to 25% sounds “about right.” Much of the timeframe for improvement depends on when a vaccine might materialize, but a recovery could begin in the second half of this year, he said.

There’s more the Fed can do to stabilize the economy, Powell said, adding that it’s “not out of ammunition by a long shot.” He mentioned options including enlarging existing lending programs and starting new ones and well as implementing “even more accommodative” monetary policy and changing the central bank’s asset-purchasing strategy. “So there’s a lot more we can do to support the economy, and we’re committed to doing everything we can as long as we need to,” he said.

Front-month gold futures climbed as high as $1,775 an ounce on Comex early Monday as investors sought a safe haven from the economic uncertainty. The most-active June gold futures contract rose 2.5% last week to settle at $1,756.30 an ounce on Comex. It advanced 0.9% Friday. Currently, the June contract is $1,741.00, with DG spot at $1,746.00. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.8% Friday to 1,113.78 metric tons, Reuters reported.

Central-bank stimulus is typically bullish for gold because the precious metal is used as a hedge against inflation. The metal also got a boost from growing tensions between the U.S. and China.

China’s Commerce Ministry said Sunday that it will take “all necessary measures” after the U.S. restricted Chinese giant Huawei’s ability to use U.S. technology. It accused the U.S. of abusing state power and violating market principles, according to an Associated Press report that cited a statement on the ministry’s website. Rhetoric between the two countries has worsened in recent weeks as each criticized the other for responses to the novel coronavirus.

The virus known as COVID-19 has killed more than 315,000 people worldwide and sickened 4.75 million. About 31% of the cases are in the U.S., though just 28% of the deaths. The U.S. has more cases than any other country.

July silver futures increased 8.2% last week to settle at $17.07 an ounce on Comex, the highest settlement for a front-month contract in more than two months. The metal gained 5.7% Friday. Currently, the July contract is at $17.27, while DG spot is $17.12.

Spot palladium slipped 0.4% last week to $1,898.00 an ounce, though it increased 1% Friday. Spot platinum rose 4.5% last week to $807.00 an ounce after a 4.4% gain on Friday. Currently, the DG spot for platinum is $821.80, while palladium is $2,055.20.

 

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