(Bloomberg) -- Gold’s scorching rally gathered more force, with prices driven higher into record territory above $2,000 an ounce as investors assessed prospects of more stimulus to combat the coronavirus pandemic’s fallout, another slide in U.S. real yields and increased geopolitical risks.Bullion is up more than 30% this year, and could extend gains as governments and central banks respond to slowing growth with vast amounts of stimulus. Federal Reserve Bank of San Francisco President Mary Daly said Tuesday the U.S. economy needs more support than originally thought. The haven’s allure as a store of wealth is strengthening as investors face the prospect of a long global recovery, and the debasement of fiat currencies, with banks including Goldman Sachs Group Inc. forecasting a rally to $2,300.“The stage has been set for gold to continue to climb higher,” Paul Wong, market strategist at Sprott Inc., said in a report. “We see increased fiscal spending ahead, extremely accommodative monetary policy in place for years and a challenging economic recovery, as stated by the Fed.”Shifts in the U.S. bond market have also underpinned gold’s meteoric ascent, with an added lift from a weaker dollar. Real yields on 10-year Treasuries have collapsed below zero and hit a record low below -1% on Tuesday. After sinking 3.3% in July, the U.S. currency is now lower in 2020.Spot gold rose as much as 0.9% to a record $2,036.81 an ounce, and was at $2,028.99 at 8:02 a.m. in London, while most-active futures traded as high as $2,052 on the Comex. Spot silver climbed as much as 2.3% to $26.6118 an ounce, the highest since 2013.“Despite the bullishness and macroeconomic drivers in gold’s favor, the rate at which prices have appreciated increases the risk of a correction,” said Avtar Sandu, senior manager for commodities at broker Phillip Futures Pte. However, the bull’s case for gold remains intact with low real rates seen sustaining higher prices, he said.Treasury Secretary Steven Mnuchin said the White House and Democrats aim to strike a deal on virus-relief legislation this week -- even though the two sides remain far apart on some issues. Meanwhile, U.S. and Chinese officials plan to assess the nations’ trade accord this month against a backdrop of rising tensions between the countries, according to people briefed on the matter.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
It’s a busy day ahead, with service sector PMIs due out of the Eurozone and the U.S to influence. The U.S stimulus package will also be in focus.
This article will review some of our past research posts to help you better understand what is really happening in precious metals right now.