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Gold futures climbed Wednesday as weakness in the U.S. dollar and nagging concerns about the global economy, supported a rise in the precious metal, a day after prices settled at their lowest in nearly two weeks.
Gold prices were are “posting good gains,” buoyed by safe-haven demand amid speculation that “some Asian investors and financial markets have been badly hurt by the collapse in crude oil prices this week,” said Jim Wyckoff, senior analyst at Kitco.com, in a daily note.
“Speculation in the marketplace at present is that Asian investors have been hit the hardest” by the drop in the now-expired May West Texas Intermediate crude futures contract to negative prices on Monday, “so hard that some Asian financial markets could experience a contagion effect and implode, said Wyckoff.
Gold for June delivery GC00, +2.41% on Comex rose $43.40, or 2.6%, at $1,731.20 an ounce, after shedding 1.4% on Tuesday and marking the lowest close for an active-month contract since April 8, FactSet data show.
BofA Global Research raised its 18-month price target for gold to $3,000 an ounce from $2,000 or more than 50% above a nine-year old record at around $1,921, citing the prospects of endless monetary expansion from central banks, including the Federal Reserve, to limit the economic damage from the COVID-19 pandemic.
Based on records going back to November 1984, the record intraday level for most-active gold futures stands at $1,923.70 an ounce on Sept. 6, 2011, with the settlement record at $1,891.90 from August 22, 2011, according to Dow Jones Market Data.
“The rather lofty upside gold price forecast from Bank of America continues to echo in the marketplace with the widely publicized quote ‘the Fed can’t print gold’ a very strong point for the bull camp,” analysts at Zaner Metals wrote in a daily update.
“It is also possible that gold and many commodities are catching a lift from news that the latest U.S. stimulus package has cleared the Senate and is very likely to be signed into law before the end of this week,” they said.
Some weakness in the dollar, off 0.1% against a basket of a half-dozen currencies, as gauged by the Intercontinental Exchange Inc. DXY, +0.02% also was helping to support an advance for precious metals. A softer greenback can make commodities priced in the currency more attractive for buyers using other monetary units.
May silver SIK20, +1.70%, meanwhile, picked up 29.4 cents, or 2%, at $15.17 an ounce, following a 4.7% slide on Tuesday.
Among other metals, May copper HGK20, +1.86% was up 4 cents, or 1.8%, at $2.2695 a pound. July PLN20, +0.58% advanced 1%, to reach $765.50 an ounce and June palladium PAM20, -0.35% added 0.2% at $1,911.50 an ounce.
