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Gold hits 7-1/2 year high as cases of coronavirus accelerate to record peaks
Gold prices rallied to its highest level since October 2012 as worries over a jump in coronavirus infections and hopes of more stimulus measures to combat the economic fallout boosted the bid tone around the safe-haven metal.
Spot gold was trading 0.2 percent up at $1,770.51 per ounce by 0809 GMT, having touched a high of $1,773.55 earlier, its highest since late 2012. U.S. gold futures rose 0.4 percent to $1,789.20.
According to a Reuters analysis, coronavirus cases in the U.S. surged 25 percent in the week ended June 21 compared from the week before. Texas, Arizona and Nevada set records for a second week in their coronavirus outbreaks, while 10 other states from Florida to California were grappling with surging infections.
On Tuesday, the New York Times reported that the European Union is prepared to bar U.S. travellers because of the increase of cases in the country, putting it in the same category as Brazil and Russia.
However, remarks from U.S. Treasury Secretary Steven Mnuchin, flagging more fiscal stimulus aimed at getting people back to work quickly, stoked positive sentiment. Moreover, better-than-expected Eurozone PMI data further supported investor's risk appetite.
Business surveys from France and Germany indicated that both the economies were recovering from the depths of the coronavirus crisis as they returned from lockdown. IHS Markit’s June euro zone Flash Composite Purchasing Managers’ Index, a broad gauge of economic activity, beat expectations with a bounce to 47.5 in June from May’s 31.9.
The greenback against a basket of currencies traded 0.2 percent down at 96.55, having touched a low of 96.39 on Tuesday, its lowest since June 11. The U.S. Treasury yields edged down, with the benchmark 10-year note yield trading at 0.708 percent, while the 2-year yield was at 0.193 percent.
Investors now await Federal Reserve Bank of Chicago President Evans and Federal Reserve Bank of St. Louis President Bullard's speech for further insight on the U.S. monetary policy outlook.