Gold Hits $1800 Per Ounce as Investors Flock to Safety
Gold spot prices eclipsed $1800 per ounce on Tuesday afternoon for the first time since 2011, according to Business Insider.
Precious metals and other investor safe havens have seen a massive inflow of buyers as the stock market rally takes a pause. Surging coronavirus cases have investors concerned that the economic recovery could slow. Federal Reserve officials recently warned that a virus resurgence would freeze the economic recovery. Furthermore, the Organization for Economic Co-operation and Development recently stated that the pandemic's damage to the labor market is far greater than during the Great Recession.
The onslaught of bad news has led investors back to gold. Year-to-date inflows for exchange-traded funds (ETFs) that track gold reached 655.6 tons on Wednesday, according to Bloomberg. Gold ETF holdings are currently at 3,234.6 tons. On Wednesday, Gold traded as high as $1,804.80 per ounce up 19 percent year-to-date.
Some analysts believe gold still has potential to run-up. On June 19, Goldman Sachs raised its 12-month price target to $2,000 per ounce as it expects investor demand for the precious metal to continue to surge amid lasting damage from the virus. Furthermore, as interest rates stay near 0 and the US dollar under pressure, the metal doesn't have a reason to stop surging.
"As we have argued in the past, gold investment demand tends to grow into the early stage of the economic recovery, driven by continued debasement concerns and lower real rates," Goldman said. "Simultaneously we see a material comeback from [emerging-market] consumer demand boosted by easing of lockdowns and a weaker dollar."