Gold at record high on weaker dollar, global growth fears
Gold prices surged to a new all-time high and were on track for their best month in more than four years, as a weaker dollar and worries over the global economic fallout from the mounting COVID-19 cases dented investor sentiment.
Spot gold was trading 1.05 percent higher at $1,976.53 per ounce by 0846 GMT, having hit an all time high of $1,983.10 earlier. The safe-haven metal rose over 11 percent so far this month, its biggest percentage rise since February 2016 and was also on track for its eighth straight weekly gain. U.S. gold futures rose 1.5 percent to $1,972.30.
The dollar index slumped to a more than 2-year low against its rivals, weighed down by abysmal economic data from the United States, rising global COVID-19 cases and U.S. President Donald Trump's suggestion for an election delay.
Data released yesterday showed U.S. GDP collapsed at a 32.9 percent annualized rate in the second quarter, the deepest decline in output on record, while jobless claims rose last week, adding to signs the momentum of economic recovery losing steam.
The bid tone around the greenback weakened further as the data highlighted the economic impact of the coronavirus and U.S. President Donald Trump raised the possibility of delaying the nation’s November presidential election.
According to a Reuters tally, more than 17.15 million people have been reported to be infected by the novel coronavirus globally and 668,419 have died. A rise in coronavirus cases in the United States, dented hopes for a quick economic recovery, sending investors seeking safety in safe-haven assets, which helped gold to rise more than 30 percent so far this year.
Downbeat U.S. growth figures overshadowed positive manufacturing data from China and Japan. China’s official Purchasing Manager’s Index data showed that factory activity grew in July for a fifth straight month and at a faster pace, while Japan’s industrial output rose 2.7 percent in June, halting four months of declines.
The greenback against a basket of currencies traded 0.05 percent down at 92.94, having touched a low of 92.55 earlier, its lowest since May 2018. The dollar index remains on course for its worst month in a decade, recording a near 5 percent drop in July, with most of the decline coming in the last 10 days as new cases of coronavirus surged across several U.S. states and recent data indicating an economic recovery losing steam.
Expectations the Federal Reserve will maintain its ultra-loose monetary policy for years also weighed on the dollar.
U.S. benchmark 10-year Treasury notes yielded 0.531 percent, down from a U.S. close of 0.545 percent on Thursday. The two-year yield touched 0.115 percent compared with a U.S. close of 0.129 percent.