Gold Holds Within Sight of $1,800 as Infections Top 10 Million

(Bloomberg) — Gold steadied just below $1,800 an ounce — a level last seen at the end of 2011 — as investors weighed the accelerating coronavirus spread in the U.S. against tentative signs of economic improvement in some regions.

Bullion is heading for its best quarter in four years after confirmed Covid-19 cases exceeded 10 million worldwide, with the spread of the disease accelerating in America, Brazil and India. While the massive central-bank stimulus has supported risk appetite recently, new Covid-19 clusters around the world indicate that the pandemic is far from over, aiding outlook for havens like gold.

Citigroup Inc. raised its three-month forecast for spot prices to $1,825, maintaining its “longstanding bullish bias” for 2021.

Gold has gained 17% this year as the health crisis prompted a sustained flight to havens amid unlimited quantitative easing led by the Federal Reserve. Investors are piling into bullion-backed exchange-traded funds, with global holdings at an all-time high.

Comex gold futures for August delivery rose as much as 0.6% on Monday to $1,790.40 an ounce, and traded up 0.2% at 6:13 a.m. in New York. Futures — which touched a record $1,923.70 in September 2011 — climbed to within $5 of $1,800 last week.

“The macro backdrop continues to favor precious exposure: falling real rates, worldwide adoption of the rate cut cycle by central banks and, of course, universal anxiety about the virus,” Macquarie Group Ltd. strategists including Tom Price said in a research note Monday. The biggest cap for the upside is “perhaps the preference for cash on collapsing inflation expectations.”

This week could bring fresh cues for markets. On Tuesday, Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin are scheduled to testify before the House Financial Services Committee. The U.S. jobs report for June on Thursday may continue data-collection issues from May that appear to understate the true scale of joblessness.