Gold futures started Monday on a high note seeing 2% gains and putting them at a level that would be the best annual return in a decade while the United States Dollar fell to its lowest value in about two and a half years.
The high value of gold bullion is likely because of continuing concerns about the coronavirus pandemic and the idea that many are trying to will the commodity to the $1,900 mark to make it a nice round number. The fears are that help to American families for health are coming very late as there was another increase in hospitalizations and deaths around the country which could lead to more government spending to offset the damage. The United States saw 201,476 new cases on Sunday and has seen an average of 212,893 over the past week, essentially flat from a week ago.
Chief market strategist of FXTM, Hussein Sayed, wrote a note on Monday that said, “multiple factors are likely to continue lending support for gold in the upcoming months.” About the pandemic Mr. Sayed says that, “the pandemic will not disappear in a matter of weeks with tougher lockdowns also expected as Covid cases continue to rise. Hence central banks will need to keep policy loose by expanding their balance sheets. And given we are starting 2021 with extraordinarily rich valuations in equity markets, gold is a must-have asset in portfolios.”
As mentioned the United States dollar is at its lowest level in about two and a half years, it is trading down about 0.5% to 89.528, the lowest since April of 2018 per the ICE U.S. Dollar Index, which gauges the dollar against six other currencies worldwide. With that gold futures for February saw a gain of about $46.20 in early trading putting it over that $1,900 mark as it currently sits at $1,941.40 per ounce.
Another precious metal with movement is Silver which saw it’s March delivery price rise about 4%, about $1.07, to $27.48 per ounce. The growth for both of these comes on the heels of the commodities seeing their biggest annual gains since 2010, per the Dow Jones Market Data. Gold rose nearly 25% in 2020, including 6.3% in December and 0.5% in a week, although the past three months only saw the rise average out to 0.3%. Silver grew by 13% in the fourth quarter to finish with a 48% annual increase.