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Gold Pierces $1,900 First Time Since 2011, Eyes Record High

CommoditiesJul 24, 2020 02:24PM ET
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© Reuters.

By Barani Krishnan

Investing.com - Gold prices breached $1,900 an ounce the first time in nine years on Friday, topping out a seven-week long rally powered by assurances of more stimulus measures worldwide to fight the coronavirus.

U.S. gold futures on New York’s Comex settled up $7.50, or 0.4%, at $1,897.50 per ounce. The session peak was $1,904.10, the highest since September 2011, when Comex gold hit a record high of $1,911.60. 

For the week, Comex gold rose 4.8%, rallying for a seventh straight week, and closing in on its 2011 all-time high, as well as the next widely anticipated target of $2,000 an ounce. 

“We’re almost certainly going to snap the 2011 high by Monday, I think,” said Eli Tesfaye, precious metals strategist at RJO Futures in Chicago. “If it happens, then the next run will be toward $2,000.” 

Spot gold, a real-time indicator of trades in gold bullion, was up $12.55, or 0.7% to $1,900.06 by 2:13 PM ET (18:13 GMT).  Its session peak of $1,906.68 placed it within striking distance of breaching the record high of $1,920.85 set in September 2011. For the week, spot gold was up 5%.

For the year, Comex gold is up nearly 24% on the year while bullion has gained more than 25%. 

The rally comes on the back of low interest rates and trillions of dollars of Covid-19 stimulus passed by governments and global central banks that have debased the dollar and other conventional currencies and heightened inflation fears — a situation which investors typically hedge by buying gold.

This year alone, the U.S. Congress has passed three coronavirus stimulus packages worth $3.3 trillion and is debating a fourth one anticipated to cost another $1 trillion plus. Separately, the Federal Reserve has devised loans and other market and economic support programs worth hundreds of billions of dollars to offset negative effects to growth from the coronavirus.  EU leaders, meanwhile, agreed earlier this week on a historic 750 billion euro ($857 billion) stimulus to rescue their economies from the pandemic.

Gold’s strength has also been underpinned by a slump in the dollar this year. The Dollar Index, which measures the performance of the greenback against six major currencies, has slid steadily from 17-year highs of 103.96 in March to below 95 now, its lowest in almost two years.

“The dollar’s slump is not ending anytime soon as negative real rates in the U.S. make it a lot more attractive to ride the European rally or (the) growth-recovery trade that will boost commodity currencies across the board,” said Ed Moya, analyst at OANDA in New York.

Gold hasn’t been the only beneficiary of the weak dollar and this year’s stimulus programs.

Silver, the second most-actively traded precious metal on Comex, is up more than 26% this year, outperforming gold which it has trailed for years.

Comex silver settled down 13.80 cents, or 0.6%, at $22.85 per ounce on Friday, sliding for a second day in a row and diverging from gold, which it rallied together with earlier in the week. Despite the combined drop of 1.3% on the week, Comex silver still finished the week up 15.6% — its biggest weekly gain in four months.

“I think silver has potential to gain much, much more if gold gets to $2,000 target,” said Tesfaye of RJO Futures. “If you consider that silver was trading at nearly $44 in September 2011 when gold hit that record high, you can see how terribly undervalued it is now.”

Gold Pierces $1,900 First Time Since 2011, Eyes Record High
 

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Comments (20)
Abdi Warsame
Abdi Warsame Jul 26, 2020 11:50AM ET
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Very interest Article, the prediction in this week will resulting the above research.
Enrique Felix
Enrique Felix Jul 25, 2020 12:42PM ET
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gold can still correct down to $1500 and still be in a mega uptrend .. would be a great time to add
CK LIM
CK LIM Jul 25, 2020 8:19AM ET
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that's why some people hold more silver than gold
Peter BullMarket
Peter BullMarket Jul 25, 2020 7:21AM ET
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Nice article
Arra Chupox
Arra Chupox Jul 24, 2020 3:28PM ET
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Felt bad when I got out before it was even close to my tp (highs of 2k11). But i was happy with the profits tho
eddie glass
eddie glass Jul 24, 2020 2:31PM ET
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i dont really know any fellow stackers who i have met over the past few years buying up here. we were all buying several hundred dollars lower. pretty crazy that people would not buy gold when it was $500 cheaper and low premiums, but gladly fork over massive premiums after it has pumped hard.
eddie glass
eddie glass Jul 24, 2020 2:23PM ET
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USD has dumped for 5 weeks straight. anticipate a relief pump in the USD with gold pulling back to the 1700-1800 range, and silver to the 19-21/oz range. i think stocks will also pull back. things will consolidate through november imo.
eddie glass
eddie glass Jul 24, 2020 2:23PM ET
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btw this is not long term bearish by any means, i am a stacker. this is just short/mid term prediction based on historical responses to elections and USD moves like this.
Ted Dirty
DirtyTed Jul 24, 2020 1:34PM ET
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The biggest and oldest Ponzi scheme in human history...don't forget to short when it will crash to the ground.
Rodolfo Barraco
Rodolfo Barraco Jul 24, 2020 1:34PM ET
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All trading is a ponzi scheme. Keep inflating till it burst. In that, whatever you trade is the same
sunil dhyani
sunil dhyani Jul 24, 2020 12:35PM ET
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silver will drop to 49306 in next 4-5 session, when it happens just remember me.. further downside will take it to 42183
Boris Borisov
Boris Borisov Jul 24, 2020 12:35PM ET
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Haha
John Pat
John Pat Jul 24, 2020 10:34AM ET
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Will go a lot higher. Canary in the coal mine for stocks and the dollar
Nareshchandra Acharya N B
Nareshchandra Jul 24, 2020 10:03AM ET
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My target of $1950 still is intact with a selling point of $1980 ...
Barani Krishnan
Barani Krishnan Jul 24, 2020 10:03AM ET
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I'm kinda trending in that direction too, Nareshchandra.
johnny tiong
johnny tiong Jul 24, 2020 9:59AM ET
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Gold and silver is king
Yiannis Tsoutsoukis
Yiannis Tsoutsoukis Jul 24, 2020 9:49AM ET
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If it breaks 1911, then nothing stops that thing, going up to 2000
Edward Chong
Edward Chong Jul 24, 2020 9:49AM ET
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i am heavy vested in goldbut honestly i doubt it can break 1911.
Joe Bourg
Joe Bourg Jul 24, 2020 9:49AM ET
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Edward Chong You’re kidding right ? You’re heavily invested on gold but don’t think it can go up another $10? Why are you heavily jnvested if you don’t think it can go up from here ? Makes no sense.
Barani Krishnan
Barani Krishnan Jul 24, 2020 9:49AM ET
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Anything above 1911 will be a record, yes. After that, there will be some profit-taking but yes, you can bet that $2,000 looks a lot more certain within a short time.
Edward Chong
Edward Chong Jul 24, 2020 9:49AM ET
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cos gold trading is much more complicated than u can imagine.
Ryan Grandinetti
Ryan Grandinetti Jul 24, 2020 9:49AM ET
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when $2000 is breached we're gonna have a breakout in gold never before seen. This isn't 2011
browser Web
browser Web Jul 24, 2020 9:48AM ET
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time to short Gold!
Andrew carson
Andrew carson Jul 24, 2020 9:48AM ET
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says the broke man
Barani Krishnan
Barani Krishnan Jul 24, 2020 9:48AM ET
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Andrew is right. My advice to anyone is don't try and stand in front of a freight train.
Marco cuevas
Marco cuevas Jul 24, 2020 9:47AM ET
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Good or bad  news?  I say bad nothing positive about this. 2011 Really?
Bradley Sims
Bradley Sims Jul 24, 2020 9:46AM ET
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Here we go...
Ali Rate
Ali Rate Jul 24, 2020 9:45AM ET
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1923
Jay On
Jay On Jul 24, 2020 9:40AM ET
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Next stop is $2000
Jermaine .A
Jermaine .A Jul 24, 2020 9:40AM ET
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Fiat currency end game is here
Abdi ig
Abdi ig Jul 24, 2020 9:38AM ET
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no other words than Gold!
Bradley Sims
Bradley Sims Jul 24, 2020 9:38AM ET
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And silver :)
 
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