Tiny but vital metal markets rush to adjust to Chinese clampdown
A bigger clampdown looks set to have far-reaching ramifications for supply chains feeding American defense and chip-making industries.
Gold prices climbed to a six-week high on Monday, driven by news that US congressional leaders reached an agreement on a $900 billion covid-19 relief bill. Meanwhile, pandemic lockdowns in the UK soured appetites for riskier assets and lent further support for bullion.
Spot gold advanced 0.5% to $1,877.14 per ounce by 1 p.m. EST, having surpassed $1,900 earlier in the day. US gold futures held steady at $1,886.40 per ounce.
“Now that we’ve got fiscal stimulus behind us, gold has enough momentum to close above $1,900 by year-end and it could climb up to $1,925,” said Stephen Innes, chief global market strategist at financial services firm Axi.
He added that dovish policies from the US Federal Reserve could also be supportive of gold. Last week, the Fed vowed to keep funneling cash into financial markets and keep rates low until economic recovery is secure.
Aiding bullion, Asian stocks slipped as Britain’s health minister suggested tighter curbs in London and southeast England might stay for some time to counter a new coronavirus strain.
“Gold has once again regained its safe-haven status as lockdowns have changed sentiment in the broader market, which looked past the pandemic and into a recovery next year instead,” Michael McCarthy, chief strategist at CMC Markets, told Reuters.
Bullion, considered a hedge against inflation, has risen over 23% so far this year amid the unprecedented stimulus unleashed globally.
(With files from Reuters)
