Gold’s climb builds on the precious metal’s biggest annual gain in a decade, as virus angst clouds the outlook for the recovery. The spread of Covid-19 throughout the festive period and tighter restrictions will have a significant toll on the economy, albeit one that’s consigned mostly to the first quarter thanks to vaccines, according to Craig Erlam, senior market analyst at Oanda Corp.
“Gold burst through $1,900 to start the year, with a softer dollar giving the yellow metal the kick it craved,” said Erlam. Following its move toward $1,945, and with the outlook for the dollar looking no better, “another run at $2,000 suddenly looks a matter of time,” he said.
Spot gold climbed as much as 0.1% to $1,945.67 an ounce, the highest since Nov. 9, and traded at $1,938.45 at 9:13 a.m. in Singapore. The metal surged 2.3% on Monday, the most in two months. Platinum declined 0.8% after hitting $1,131.62 an ounce on Monday, the highest since 2016. Silver also eased.
U.S. real yields – the difference between nominal benchmark bond yields and the rate of inflation – were at -1.117% on Monday, while the Bloomberg Dollar Spot Index is near a 2018 low.
See also: Gold holds gains as Trump tax bill stokes US deficit concerns
Traders were also tracking Tuesday’s runoff elections in Georgia and a rise in tensions in the Persian Gulf. The U.S. contest will determine whether Democrats have control of Congress to push President-elect Joe Biden’s agenda. In the Middle East, Iran seized a South Korean-flagged oil tanker in the Strait of Hormuz hours before announcing it would increase its nuclear activities.
