Gold climbs to highest level since 2012

The gold price rallied again on Thursday, as investors sought a store of value after the Fed said it was pumping an additional US$2.3 trillion in the US economy to stave off depression.

On the Comex market in New York, gold for delivery in June, the most active contract, jumped to its highest price since November 2012, at US$1,730 per oz., up just over US$50 per oz., or 3%, compared to Wednesday’s close.

U.S. Fed Chairman Jerome Powell said that the bank was committed to using its powers “forcefully, pro-actively, and aggressively until” the U.S. economy is “solidly on the road to recovery.”

Powell’s comments in a prepared speech, delivered virtually, followed data showing jobless claims in the U.S. surging by more than 6 million for the second week in a row, prompting fears that unemployment could reach more than 15%.

Last month, Goldman Sachs said inflationary concerns triggered by the central bank policy response to the pandemic could send gold to US$1,800 per oz. as the currency of last resort.

“We believe physical inflationary concerns with the dollar starting near an all-time high will for once dominate financial asset inflation that was a feature of the past decade.”

Bloomberg reports the gap between New York futures and spot prices in London for physical bullion have widened to roughly US$40, a sign of lingering concern over future supply and the difficulty of shipping bars around the world amid the pandemic.

“People are paying the premiums over in the physical market, and I think it’s rolling into the futures,” said Peter Thomas, a senior vice president at Chicago-based broker Zaner Group. “It’s safe-haven buying. People are scared.”

Global gold-backed exchange-traded funds (ETFs) had US$23 billion, or 298 tonnes, of net inflows in the first quarter of 2020 – the highest quarterly amount ever and the largest tonnage additions since 2016, the World Gold Council said in its latest report.

During the past year, gold ETFs added 659 tonnes, the highest amount on a rolling annual basis since the financial crisis, with assets under management (AUM) growing 57% over the same period.

For the month of March, gold ETFs added 151 tonnes for a net inflow of US$8.1 billion, boosting holdings to a new all-time high of 3,185 tonnes.

— This article first appeared in our sister publication, MINING.com.