Gold price rally back on track
The gold price rally continued on Wednesday as wild fluctuations in the financial markets increased, oil increased by a fifth and physical demand for the metal continued to increase.
In the Comex market in New York, gold for delivery in June, the most active contract, rose up to $ 54.60 an ounce, or 3.2%, to $ 1,742.40, wiping out the decline on Tuesday.
Gold has risen more than $ 210 an ounce, or 14%, since the beginning of the year as investors flock to safe havens.
A week ago, gold futures peaked at $ 1,788 an ounce, a seven-and-a-half-year high when central banks around the world pumped trillion dollars of economic dollars into financial markets to support the economies brought to a halt by the Covid 19 pandemic.
Peter Grosskopf, chairman of the asset manager Sprott, a pioneer in the gold-backed ETF industry, said of Bloomberg’s demand for gold “overshadows the surge in the recent financial crisis”:
“Everybody wants to reexamine gold and it’s not a fringe asset anymore. We’ve been run off our feet.
“Even though we’re operating virtually, we cannot keep up with the demand to speak with new clients or interested clients. It just keeps climbing.”
Gold 3,000?
Bloomberg reported Tuesday that Bank of America raised its 18-month gold price target by a full $1,000 to $3,000 an ounce in a report titled “The Fed can’t print gold”:
“As economic output contracts sharply, fiscal outlays surge, and central bank balance sheets double, fiat currencies could come under pressure,” analysts including Michael Widmer and Francisco Blanch said in the report. “Investors will aim for gold.”
That compares to an all-time high just above $1,900 an ounce struck in August 2011 in the aftermath of the global financial crisis.
ETF boom
Global gold-backed exchange-traded funds (ETFs) had $23 billion, or 298 tonnes of net inflows in Q1 2020 – the highest quarterly amount ever and the largest tonnage additions since 2016, the World Gold Council said in its latest report.
During the past year, gold ETFs added 659 tonnes, the highest on a rolling annual basis since the financial crisis, with assets under management (AUM) growing 57% over the same period.
For the month of March, gold ETFs added 151 tonnes for a net inflow of $8.1 billion, boosting holdings to a new all-time high of 3,185 tonnes.
Source: mining. com
