Gold futures headed higher for a second session on Wednesday, on track to mark their highest settlement in about two months.
A rise in cases of COVID-19 from more transmissible variants, especially in Asia and Latin America, threatens the world’s economic rebound from the pandemic, boosting the precious metal’s appeal as a investment haven.
The concerns about the disease has also kept a rise in long-term bond yields at bay, with the 10-year Treasury note yield BX:TMUBMUSD10Y hanging around 1.57%. Subdued government debt yields can boost appetite for precious metals which don’t offer a coupon.
“Nominal yields have been on a downward trajectory since the beginning of the second quarter, as has the U.S. Dollar Index,” said Ross Norman, chief executive officer at Metals Daily. “Yields remain the key factor.”
gained $17.30, or 0.9%, at $1,795.70 an ounce, after rising 0.4% a day ago. Prices based on the most-active contracts are poised to settle at their highest since Feb. 24, FactSet data show.
Notably, India recorded over 250,000 new infections and over 1,700 deaths in the past 24 hours, and the U.K. announced a travel ban on most visitors from the country this week, the Associated Press reported.
Outside of the U.S., India has the second-highest number of cases at 15.6 million, and is fourth globally by deaths at 182,553, although those numbers are likely understated.
Precious metals are seen as a haven against uncertainty wrought by COVID.
Meanwhile, “demand from price sensitive Asia remains robust, with gold trading at a $10 premium in Shanghai over [local] London prices,” Ross told MarketWatch.
“Physical demand for coins and bars in Europe remains hot with premiums remaining elevated,” he said. And “perhaps most encouragingly,” the selling by institutions of the gold exchange-traded fund has abated while central bank demand has re-emerged.”
“In short, gold looks set for a successful retest of resistance at $1,800, but it remains to be seen how high it can go before the Asian demand peters out and the market flatlines again,” Ross said.
In other metals action, silver for May delivery
added 62.5 cents, or 2.4%, to trade at around $26.47 an ounce, following a flat finish on Tuesday.
also climbed by 1.2% to $4.27 a pound, with prices set for their highest finish since late February. July platinum
tacked on 1.1% to $1,208.90 an ounce and June palladium
traded at $2,847 an ounce, up 3.3%. Palladium futures eyed another finish at a record high.