Fundamental Comment

Gold skyrockets to new all-time high on market jitters

Gold skyrockets to new all-time high on market jitters

Gold prices skyrocketed to a new all-time high on Monday amid market jitters with the rise in coronavirus cases in several countries and elevating tensions between the United States and China.

The intraday gold prices recorded the highest level ever today at $1945.24 an ounce after it opened trading today at the level of $1901.94 per ounce, recording their seventh consecutive session of gains.

In September, 2011, gold set a new zenith at $1920.80, following consistent haven demand after the global financial crisis and the European debt crisis.

Mainly, tensions in financial markets result in higher demand on safe havens, led by gold, which also took advantage of the drop in the U.S. dollar.

China has recorded the highest daily increase in new coronavirus cases since April, where new Covid-19 outbreaks in Asia yielded in local lockdowns.

The UK government has imposed 14-day quarantine on visitors returning from Spain, while reiterated that other countries are under review.

On the other hand, tensions between Washington and Beijing intensified after China said it had seized the buildings of the US consulate in the southwestern city of Chengdu, in retaliation to the U.S. closing of the Chinese consulate in Houston, Texas.

Meanwhile, the US dollar is suffering from a decline against the major currencies, as it recorded its lowest levels since September 2018, while extended its losses for a seventh straight session.

The dollar index, which measures the performance of the federal currency against a basket of major currencies, slipped to a low of 93.68, while it opened today's trading at the level of 94.23.

On Wednesday, the Fed is highly predicted to soften its stance on inflation, which means holding interest rates at the current low levels for longer period.

It is important to take into consideration that generous stimulus by central banks worldwide have boosted demand on gold as an inflation hedge.

Silver took the same foot prints of gold, jumping more than 7 percent to a new record high at $24.59 an ounce.

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