Gold prices were on track to surge by the most in more than a decade as the precious metal extended its rally to start the week, following the closure of gold mining operations and moves by the Federal Reserve to address the coronavirus crisis.
“The gold price finds itself the perfect environment with first the Federal Reserve unleashing its potentially unlimited stimulus package, followed by the closure of some Swiss gold refineries due to coronavirus,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades, in a Tuesday note.
Gold for April delivery GCJ20, 5.505% on Comex was up $103.40, or 6.6%, at $1,671, after the yellow metal booked a 5.6% gain, pushing the commodity to its highest trading level since early February, according to FactSet data. The percentage gain, if it holds, would represent the largest since March 19, 2009, according to FactSet data.
In a bullish Tuesday research note, analysts at Goldman Sachs described the commodity as the “currency of last resort” and said that the market volatility tied to the outbreak of COVID-19, the infectious disease that has caused a shutdown in much of the world, will help drive prices of bullion higher.
“We have long argued that gold is the currency of last resort, acting as a hedge against currency debasement when policy makers act to accommodate shocks such as the one being experienced now,” wrote analysts at Goldman Sachs led by Jeffrey Currie.
Gold took flight on Monday after the Fed unveiled a major stimulus package that includes unlimited purchases of Treasurys and…
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