- Gold futures swung higher on Thursday and neared a record close as investors continued to hedge against a worse-than-expected recession.
- Contracts for the precious metal leaped as high as $1,897.70 per ounce, overtaking their all-time closing high of $1,891.90 from August 2011.
- The asset’s intraday high is just a 1.4% climb away from breaching the previous intraday record of $1,923.70, also set in 2011.
- Gold has rallied sharply through the summer as investors bet on near-zero rates, growing economic risks, and inflation to boost the metal’s value against the dollar.
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Gold is on track to close at a record high on Thursday as investors continue to pick safe-haven assets to ride out the coronavirus pandemic.
Futures for the precious metal traded as high as $1,897.70 per ounce through the session, passing their record close of $1,891.90 set in August 2011. Gold contracts’ intraday record, also set about nine years ago, sits at $1,923.70 per ounce, just a 1.4% climb from Thursday’s peak.
The popular hedge bet has rallied through the year as investors wary of a longer-than-expected recession flee from stocks and bonds. Gold prices typically turn higher during an economic downturn, as the metal’s scarcity and historic allure lead it to appreciate over the dollar.
Near-zero interest rates and a wave of economic stimulus measures also boosted the precious metal. Such policies make gold a popular pick for yield-starved investors, as holders expect rising inflation to boost bullion’s relative value.
“The scale of quantitative easing is staggering, and that is causing real concern that the extra money in the system will lead to inflation,” Ed Moy, chief strategist at gold seller Valaurum and former director of the US Mint, said. “When people are scared, they want to take chips off the table, and gold is typically one of the places where people put their chips in times of crisis.”
Gold bulls have plenty of recent events to point to for their optimism. The US’s surprise order for China to close its consulate in Houston revived tensions between the two superpowers on Wednesday and spooked risk markets. Soaring coronavirus case counts throughout the US have slowly turned calls for a swift economic recovery into concerns of a lengthy downturn.
The metal’s rally has shown little sign of stopping since tearing higher in May. Even some of the factors that could halt the upward momentum won’t materialize for months, Edward Moya, senior market analyst at OANDA, said.
“The gold trade is overcrowded but the fundamentals strongly support that climb to record high territory over the next month,” he said in a note. “The major risk for gold is if one of the top vaccine bets has impressive phase 3 results and that won’t happen for many weeks as the trials are just getting…