Gold
hit a new record high on Wednesday amid expectations that the money printing
policies by major economies would drive inflation higher and on fears of a
second wave of Covid-19 pandemic.
The
intraday gold prices recorded the highest level ever today at $2039.90 an ounce,
extending gains for a second consecutive session, after the breach of the psychological
level of $2,000 per ounce.
The
U.S. Congress is looking forward to reaching a deal on a new rescue package by
the end of the week, amid pressure from lawmakers to provide more help
to the U.S. economy to overcome the repercussions of the Covid-19 spread.
The
generous spending schemes announced by major economies to counter the impact of
the lockdowns have been pushing gold prices up as investors seek safety against
inflation.
Meanwhile,
yields on government bonds are at record low, with some of them providing negative
returns, which makes bullions a better refuge and investment.
On
the other hand, still there are fears of a second coronavirus wave, as the new
infections have recently started to increase, which would prompt governments to
impose new restrictions.
While
there is a general improvement in economic data in major economies, a second
wave of coronavirus would offset this progress and may propel policymakers to
launch new stimulus packages.
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.
In
September, 2011, gold set a new zenith at $1920.80, following consistent haven
demand after the global financial crisis and the European debt calamity.
Additionally,
rising tensions between the US and China have provided more support to gold, as
President Donald Trump is obliging TikTok to sell its US operations.
A
fact that cannot be ignored is that the weak dollar is one of the key drivers
to gold, as it boosts demand on the precious metal as an alternative investment.
The
dollar index, which measures the performance of the federal currency against a
basket of major currencies, slipped to a low of 92.97, hovering near its lowest
level since May 2018.
The
dollar index experienced its worst monthly decline since September 2010 in
July, falling 4.1 percent, while currently heading for its seventh straight weekly
plunge.
Silver took the same
foot prints of gold, jumping more than 2.5 percent to a new record high at $26.77
an ounce.