By Barani Krishnan
Investing.com - Gold prices hit 10-week highs on Monday, closing in on the $1,800-per ounce level targeted by market bulls, as fears about a second wave of Covid-19 in the United States and many other countries drove investors toward the safe haven.
At least 22 of the 50 US states have reported a rise in COVID-19 cases after reopening their economies over the past two months. In Arizona, a particular hotspot, infections shot up 54% in a week. These come as more than 2.4 million Americans have already been infected by the coronavirus, with a death toll breaching 122,000. A new model by the University of Washington predicts 200,000 COVID-19 deaths in the United States by Oct. 1.
Globally, South Korea and China are battling stubborn new outbreaks, and the Australian state of Victoria has extended control protocols for another four weeks. New Zealand is also facing an uptick in cases arriving at its isolation facilities from overseas Kiwi's returning home.
“The kinds of severe economic shocks we're going to experience are far beyond the Band-Aid prescriptions, the trillion here, the trillion there, of liquidity infused into the market,” said Laurie Garrett, a Pulitzer-winning historian on pandemics. “We either stop this epidemic or we have economic collapse.”
U.S. gold futures for August delivery settled up $13.40, or 0.8%, at $1,766.40 per ounce on New York’s Comex. The benchmark for gold futures earlier spiked to $1,778.95, the highest reached on Comex since April 14.
Spot gold, which tracks real-time trades in bullion, rose by $14.34, or 0.8%, to $1,758.41. The intraday high for the bullion indicator was $1,763.22.
“The break of the $1,750 level was critical for gold’s path higher,” said Ed Moya, an analyst at New York’s OANDA. “If the coronavirus spread continues to see a record increase in global cases, gold prices should be able to target the $1,800 an ounce level at some point this week.”
Monday’s run-up in gold was an extension of Friday’s rally, sparked by Goldman Sachs’ forecast that gold prices could rise by another $250 or more in coming months as governments expand stimulus efforts to battle the Covid-19.
Goldman last week lifted its three-month forecast for gold to $1,800 from $1,600. It placed its six-month forecast at $1,900 from a previous $1,650. The Wall Street firm also widened its longer-term, 12-month target to $2,000.