International spot gold was trading at $1,783 an ounce in Early Asian trading on Wednesday. After a volatile session in which gold rose as high as $1,785.86 an ounce, the metal remained steady around the high and held above the $1,780 mark.
Spot gold rose as high as $1,785.60 an ounce at $1,770.92 in morning trading, its highest level since October 2012, and dipped as low as $1,764.88 to close at $1,779.70, up $8.20, or 0.46 per cent.
Meanwhile, COMEX gold futures for August delivery closed up 1.1 percent at $1,800.50 an ounce, the highest close since 2011, and up nearly 13.0 percent for the second quarter.
Spot gold rose $50.19, or 2.90 percent, in June and $262.69, or 17.32 percent, in the first half of the year.
Gold prices on Tuesday rose to an eight-year high of $1,785.88 an ounce, the highest level since October 2012, as mounting concerns about a rise in novel Coronavirus infections kept safe-haven demand alive, driving the biggest quarterly gain since March 2016.
In addition, international physical silver rose more than 30 per cent in the second quarter, its best quarterly performance since the end of 2010.
Afshin Nabavi, senior vice President at precious metals trader MKS SA, said the rise in US coronavirus cases and ongoing conflict between China and the US “both point to a safe-haven bid for gold”.
“Commodity trading advisers and algorithms are encouraged by gold’s rise to a high of $1,780,” said Tai Wong, head of basic and precious metals derivatives trading at BMO. Bulls were pleased with the almost certain strong close, which provided the basis for a near-term push to $1,800. Gold, long seen as a hedge against inflation and currency depreciation, is set for a third straight month of gains on the back of stimulus measures.”
Jim Wyckoff, a senior analyst at Kitco Metals, said “bullish fundamentals remain in the gold market, including COVID-19, which is still driving safe-haven demand, and record central bank stimulus” that could spark inflation in the future.
Meanwhile, Daniel Ghali, commodity strategist at TD Securities, said: “US yields have been falling and as a result real interest rates have hit new lows,” boosting precious metals.
But Craig Erlam, analyst at OANDA, said: “Every time risk aversion comes back to the dollar, I think that puts some pressure on gold.”
News of the china-U.S. relationship has been driving markets crazy
As the global epidemic continues to spread, geopolitical storms continue to play out, and conflicts between China and India remain unresolved, the uncertainty in China-Us relations has risen again this week. The Standing Committee of the National People’s Congress (NPC) on Tuesday passed Hong Kong’s National Security Law, listing it in Annex III to the Basic Law. Subsequently, the Information Services Department of the Hong Kong Special Administrative Region of the People’s Republic of China issued a notice that the “Law of the Hong Kong Special Administrative Region of the People’s Republic of China on Safeguarding National Security” was gazetted in the Hong Kong Special Administrative Region and came into force at 11pm today. In response, the US said the new Law violated international commitments and vowed to continue to take strong action “against those who suppress Hong Kong’s freedom and autonomy”.
The 20th session of the Standing Committee of the 13th National People’s Congress (NPC) of China passed the National Security Law of the Port area with a unanimous vote on Tuesday morning, and President Xi Jinping signed the order, which will take effect from the date of promulgation. The Hong Kong Special Administrative Region of the People’s Republic of China (HKSAR) Law on Safeguarding National Security will take effect at 11pm on Tuesday, the government said in a press release posted on its website.
In a communique, the HKSAR Government said that in accordance with the decision, the “Hong Kong Security Law” was promulgated in Hong Kong by the HKSAR. The promulgation was signed by The Chief Executive, Mrs Carrie Lam, and was gazetted this evening (June 30).
Hong Kong’s National Security Law stipulates that those who commit the crimes of secession from the state, subversion of state power, terrorist activities, and collusion with foreign or overseas forces to endanger state security shall be sentenced to life imprisonment.
The provisions stipulate that whoever commits the crime of secession shall be sentenced to life imprisonment or fixed-term imprisonment of not less than 10 years if the ringleaders or the crimes are major; Whoever commits the crime of subversion against the state power, if the ringleaders or the crimes are major, shall be sentenced to life imprisonment or fixed-term imprisonment of not less than 10 years.
Whoever commits the crime of terrorist activities, thus causing serious injury or death to another person or causing heavy losses to public or private property, shall be sentenced to life imprisonment or fixed-term imprisonment of not less than 10 years; Whoever organizes or leads a terrorist organization shall be guilty of a crime and shall be sentenced to life imprisonment or fixed-term imprisonment of not less than 10 years and shall also be sentenced to confiscation of property.
Whoever commits the crime of colluding with a foreign state or an overseas force to endanger state security shall be sentenced to fixed-term imprisonment of not less than three years but not more than 10 years; If the crimes are serious, he shall be sentenced to life imprisonment or fixed-term imprisonment of not less than 10 years.
In response, the United States on Tuesday accused China of violating its international commitments by passing a new Hong Kong security law and vowed to continue to take tough action “against those who suppress Hong Kong’s freedom and autonomy.”
27 countries, including France, Britain and Germany, issued a joint statement at the UN Human Rights Council after the passage of Hong Kong’s security law, saying it threatens Hong Kong’s freedom and calling on Beijing to “think twice” about reconsidering it, AFP reported. Of the 27 countries, most are members of the European Union, including France and Germany, as well as Australia, Canada, Japan, New Zealand and Switzerland.
Meanwhile, U.S. House Of Representatives Speaker Nancy Pelosi has called for sanctions and other actions against China, saying all available tools, including visa restrictions and economic sanctions, must be considered in response to China’s passage of the Port zone security law.
The White House National Security Council said the move violated the Sino-British joint declaration and that Beijing now treats Hong Kong as “one country, one system”, as the US must. The United States will continue to take tough action against those who stifle freedom and autonomy in Hong Kong.
Separately, the Federal Communications Commission on Tuesday labeled Chinese telecommunications companies Huawei and ZTE a national security threat, barring U.S. companies from using $8.3 billion in government funds to buy their equipment.
In 2019, the agency voted unanimously to bar telecom manufacturers it deemed a threat from receiving funds aimed at expanding Internet access in underserved areas, including rural America. Tuesday’s announcement is the final step in blocking Huawei and ZTE from receiving the money.
The Trump administration has been pressing Chinese companies on security. U.S. officials are urging countries around the world not to use Huawei’s network gear in the next generation of wireless networks, known as 5G.
Uncertainty in U.S.-China relations, particularly disagreements over Hong Kong, is adding to tensions, and geopolitical risks are rising further. The next step, expected to boost risk aversion in the markets, could give precious metals a further boost.
Gold aftermarket outlook
Ole Hansen, commodities strategist at Saxo Bank, said the recent increase was a sign that the gold market was ready for a break after a nearly 50 per cent fall in long-held positions.
Extremely loose monetary policy around the world and the risk of a second pandemic continue to support gold, Pacific Securities noted. The more alarming scenario is that the rebound in global financial market sentiment appears to be out of step with the shift in the underlying economic outlook. Typically, the U.S. stock market continues to rebound. The current economic and corporate fundamentals do not support such a rise, and gold will continue to gain support once U.S. corporate earnings rebound due to the second outbreak.
Commerzbank said it was only a matter of time before gold broke through significant resistance levels in the current environment. There are plenty of signs that gold will continue its upward trend this week. Risk aversion is back.
Spot gold is trading below $1,800 an ounce, ANZ said, as investors will hear from Federal Reserve Chairman Colin Powell on the future of monetary policy in a novel Coronavirus outbreak. Gold prices will continue to be supported by an increase in novel Coronavirus infections, continued demand for safe-haven assets and continued investor flooding into the physical gold market.
On a technical level, gold has been in broad range mode for the past few weeks, making investors more cautious about whether prices will break through, and once they do, they are expected to increase positions in the same direction, said FX Street analyst Haresh Menghani.