Gold Surges to 7-Year Top as Pandemic Fears Spark Safe-Haven Rush
The comments below are an edited and abridged synopsis of an article by Reuters
Gold has soared to its highest level in seven years as investors worried about global economic growth in the face of sharply rising coronavirus cases outside China.
The markets are spooked, partly because of coronavirus fears. There was a sharp rise in cases reported in Italy, South Korea and Iran, with Afghanistan and Iraq reporting their first cases. However, the rate of infection in China has eased.
Outside mainland China, the outbreak has spread to about 29 countries and territories, with a death toll of about two dozen, according to a Reuters tally.
The World Health Organization said it was worried about the growing number of cases without any clear link to China.
Investors view gold and other assets, like government bonds and the US dollar, as safe havens during times of stress.
The curve inversion between the 3-month and 10-year Treasury bond yields deepened in what could be a recession signal. The benchmark 10-year Treasury yield fell to its lowest since July 2016.
Investors’ fears over the virus outbreak triggered a wide sell-off in US equity markets. In Europe, markets had their biggest daily declines since mid-2016.
“The upswing in the gold price is being accompanied by further ETF inflows. Speculative financial investors have also increased their bets on rising gold prices significantly,” Commerzbank analysts said in a note.
Mirroring gold’s gains, silver rose 1.6% to $18.75 an ounce, having hit its highest since September at $18.90.