By Barani Krishnan
Investing.com - Gold raced to a 7-1/2 year high on Monday with the safe-haven crowd boosting the yellow metal’s prices amid the dilemma on reopening the U.S. economy at the risk of increasing Covid-19 infections.
Gold futures for June delivery on New York’s COMEX settled up $8.60, or 0.5%, at $1,744.80 per ounce. It earlier scaled $1,772.55, the highest for a front-month gold futures on COMEX since October 2012, when it reached $1,794.80.
Spot gold, which tracks live trades in bullion, caught up partially with the highs in futures after a wide gap between the two last weeks. Spot gold was up $36.78, or 2%, at $1,720.41 by 3:26 PM ET (19:26 GMT). The session high for bullion was $1,723.83.
Gold’s rally last week came as the Federal Reserve announced as much as $2.3 trillion in additional aid, including a pledge to provide support to risky corners of financial markets that have been hardest hit by fallout from the pandemic. The Fed support came as U.S. jobless claims surged for a third-straight week, rising by 6.6 million to bring to about 17 million jobs lost in just three weeks.
Monday’s gains came as President Donald Trump opened a new fight with the media, saying he will decide “shortly” on when to bring Americans back to work, even as New York Governor Andrew Cuomo said he preferred to wait for the all-clear signal from medical professionals.
“For the purpose of creating conflict and confusion, some in the Fake News Media are saying that it is the Governors decision to open up the states, not that of the President of the United States & the Federal Government,” Trump tweeted.
“Let it be fully understood that this is incorrect. It is the decision of the President, and for many good reasons. With that being said, the Administration and I are working closely with the Governors, and this will continue. A decision by me, in conjunction with the Governors and input from others, will be made shortly!”
Gold traders said the dilemma over the reopening of the economy was another factor for investors to get into safe havens.
“For many, It’s a face-palm situation with the president trying to do his one-upmanship on the governors on who has the authority to reopen the economy in the states, which clearly is the prerogative of the governors,” said Tariq Zahir of Tyche Capital Advisors in New York.
“But for the gold crowd, the governors are in a true dilemma between balancing economic interests and putting health first. That’s another reason to get hedged.”