Gold prices extend climb above 9-year high as traders see few limits to central-bank stimulus

Silver futures near psychologically significant level at $19 an ounce

Gold futures were extending their gains early Wednesday after their highest settlement in the previous session since September 2011, supported by the prospect of a lengthy period of government and central bank stimulus to support economies harmed by the COVID-19 pandemic.

On Tuesday, the Federal Reserve’s No. 2, Richard Clarida, did little to disabuse investors of the view that the Fed would do whatever it takes to limit the damage from the viral outbreak.

“We have a lot of accommodation in place; there’s more that we can do, there’s more that we will do, if we need to,” the Fed Vice Chairman said on CNN International. The Fed’s balance sheet has grown from $4 trillion back in March to about $7 trillion, as policy makers unfurled a cavalcade of programs intended to inject liquidity into markets that have been nearly frozen due to fears of the economic impact of the pandemic.

Precious metals have benefited from loose monetary policy as billion is viewed as a hedge against uncertainty and a protection against a wave of money printing to help stimulate economic growth.

“Hearing this from the Vice Chair and it should be no surprise that gold continues to move higher and which I remain bullish on,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group, in a Wednesday research note.

August gold GCQ20, 0.81% was trading $4.90, or 0.3%, at $1,814.80 an ounce, following a 0.9% gain for the yellow metal to its loftiest finish since Sept. 16, 2011, according to FactSet data.

Meanwhile, September silver SIU20, 1.58% traded 15 cents, or 0.8%, higher at $18.845 an ounce, driving gold’s sister metal near the psychologically important level at $19, after it gained 0.6% in the previous session.

MarketWatch – Published July 8, 2020 – By Mark DeCambre

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