Gold at all-time peak as U.S.-China ties worsen, coronavirus cases continue to surge
Gold prices surged to record highs as an intensifying U.S.-China tensions dented the dollar and cemented expectations that central banks would continue injecting stimulus to ease the economic stress from a worsening coronavirus pandemic.
Spot gold rose 1.9 percent to $1,939.50 per ounce by 0826 GMT, having hit an all time high of $1,944.77 earlier. U.S. gold futures advanced 2.05 percent to $1,936.40.
The dollar slumped to a near 2-year low versus major currencies as investors drove away from the world’s reserve currency on increased bets the Federal Reserve could flag another accommodative shift in its outlook this week.
The Federal Reserve meets on Tuesday and Wednesday but no major announcements are anticipated, although analysts expect policymakers may begin laying the groundwork for more action in September.
The safe-haven metal was also supported by concerns over the global recovery as coronavirus cases spike and geopolitical tensions worsen.
The standoff between Washington and Beijing showed no signs of abating with both sides ordering the closure of consulates in Chengdu and Houston. On Monday, China said it had taken over the premises of the U.S. consulate in Chengdu after ordering the facility shut in retaliation for being ousted from its consulate in Houston.
The White House and Senate Republicans agreed on a $1 trillion relief package, but that must be negotiated with Democrats who have been pushing for bigger spending. Democrats want enhanced benefits of $600 per week to be extended and look to much bigger stimulus compared with the Republicans’ $1 trillion plan.
The COVID-19 outbreak continued to worsen, with more than 16.13 million people cases globally and 644,836 deaths, driving expectations of more stimulus globally to ease the economic impact.
The greenback against a basket of currencies traded 0.4 percent down at 93.97, having touched a low of 93.84 earlier, its lowest since September 2018. The U.S. Treasury yields edged lower, with the benchmark 10-year note yield trading at 0.580 percent.