Gold on track for highest close in 7 years as investors hedge stock market highs and virus fears
February 19, 2020 @ 21:42 UTC
Having surpassed the key $1,600 mark, gold prices were flirting with a seven-year high on Wednesday, as investors continue to shore up their positions amid the coronavirus outbreak. The precious metal was up a further 0.5% to trade at around $1,609.61 per troy ounce (/oz) during European morning trade on Wednesday, testing the levels last seen on January 8 after the U.S. killing of Iranian military commander Qasem Soleimani. If the sport price settles above $1,604.1/oz it will be its highest settle since March 27, 2013, when gold settled at $1,606.2/oz
Gold typically performs well during flights from risk assets, and has seen upside momentum as a result of global concern over the potential economic fallout from the new coronavirus, which has now infected more than 74,000 people in China, killing 2,004. However, the recent surge continued on Wednesday despite positive momentum seen in global stock markets, with China returning to work following extended shutdowns and the rate of infections slowing on Tuesday. Stocks in Europe and the U.S. continue to eke out fresh record highs, but Gerrish suggested that the composition of equity market gains could render them fragile.
Goldman Sachs highlighted this week that outside of the big five tech giants — Facebook, Amazon, Apple, Microsoft and Alphabet — earnings growth on the S&P 500 is flat. “What we like to see in a healthy market is broad-based buying across the board. We are starting to see that thematic playing out in Australia as well, with a number of these select go-to stocks driving the market, whereas there is a lot of choppiness under the surface,” Gerrish said, adding that U.S. equities in particular are likely to see a correction in the near future.
Gold on track for highest close in 7 years as investors hedge stock market highs and virus fears, CNBC, Feb 19