Gold vaults to highest since Oct 2012 as dollar stumbles

(Reuters) – Gold prices surged to their highest since October 2012 on Tuesday, driven by a weakness in the U.S. dollar and widespread monetary stimulus packages by central banks as a jump in coronavirus cases dents the economic outlook.

FILE PHOTO: A sales assistant displays a 1000 gram gold bar as an investment for a customer at Caibai Jewelry store, in Beijing, China, August 6, 2019. REUTERS/Jason Lee/File photo
Spot gold climbed 0.6% to $1,765.56 per ounce at 10:59 a.m. ET (1459 GMT), having hit $1,768.96, its highest since October, 2012. U.S. gold futures were up 0.9% to $1,783.10 per ounce.

“The tsunami of stimulus coming in from everywhere is not only inflationary but also painting a weaker picture for the economy and making gold look attractive,” said Edward Meir, analyst at ED&F Man Capital Markets.

Gold has gained nearly 16% this year supported by global stimulus measures since the non-yielding metal is considered a hedge against inflation and currency debasement.

The dollar was down 0.6% at 96.46 against a basket of currencies, making gold cheaper for non-U.S. currency holders.

More than 9.14 million people have been reported to be infected by the coronavirus globally and 473,031 have died, a Reuters tally showed on Tuesday.

“We expect that a continued suppression of real rates will continue to drive capital to seek shelter in gold’s warm embrace,” TD Securities wrote in a note.

“Real rates are printing new lows, driven by long-term inflation expectations which continue to rise as market participants grow more confident about the economic recovery.”

Gold’s gains came despite a rise in equities driven by encouraging economic data and after U.S. President Donald Trump tweeted the U.S.-China trade pact was “fully intact”.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.58% to 1,166.04 tonnes on Monday, a level last seen in April 2013.

Elsewhere, palladium slipped 1.2% to $1,914.14 per ounce, platinum was down 0.2% at $820.66 per ounce and silver rose 0.4% to $17.90 per ounce.