Gold was back on the rise Monday, on track to tally its first gain in three sessions, with analysts tying support to a global rise in the number of COVID-19 cases and strong investment in gold-backed exchange-traded funds.
With ETF investment continuing to flow in, “uncertainty from expanding second wave of infections and U.S. [Treasurys] last week returning to the vicinity of the ‘panic highs’, we leave the bull camp with an edge,” analysts at Zaner Metals, wrote in a note Monday, adding that Friday marked an 11th straight daily inflow to gold-backed ETFs.
Gold pulled back Thursday and Friday after ending Wednesday at its highest level since September 2011. The yellow metal remained positive for the week, rising 0.7% for its fifth straight weekly gain to leave it up by around 18% for the year to date. Silver rose around 4% for the week.
Monday’s gain “shows that price falls such as that on Friday are still being viewed as buying opportunities and that the market wants the price to climb even further,” said Carsten Fritsch, analyst at Commerzbank, in a note.
“While gold has already achieved all-time highs in virtually all major currencies this year, it is still a good $100 from doing so in U.S. dollar terms,” he said. “There are plenty of arguments in favor of further price rises: the number of new [coronavirus] cases is still soaring at a record rate, both world-wide and in the U.S. This increases the potential for stock market corrections.”
Total U.S. coronavirus cases exceeded 3.3 million on Monday and the nation’s death toll topped 135,000, The Wall Street Journal reported, citing data compiled by Johns Hopkins University.
Among other metals traded on Comex, September copper HGU20, +2.19% tacked on 2.5% to $2.97 a pound. October platinum PLV20, +1.85% rose 2.1% to $863.30 an ounce and September palladium PAU20, +3.64% traded at $2,089.60 an ounce, up 4.8%.
“While we remain highly skeptical of the palladium bull market, the charts over the past two weeks have shifted positive with the highest trade since early June seemingly linking the market back with gold and silver,” said analysts at Zaner Metals, in a daily note.
“Unfortunately as in other physical commodity markets, the trade could be threatened with a downward adjustment in physical/industrial demand expectations in the event a risk off week unfolds in the wake of the infect[ion] surge,” they said. Still, it’s possible that the platinum group metals market “could suddenly join ranks with gold and silver as a part of the safe haven sector…”