Gold rallies, spread balloons as investors charge into bullion
[SINGAPORE] Gold surged, with futures leading the way higher to hit the highest level in more than seven years, as investors weighed the widening economic fall-out from the coronavirus pandemic and the prospects of more stimulus in top economies.
Bullion is in demand, with JPMorgan Chase & Co's Jamie Dimon saying the disease will lead to a major major downturn. The jump came even as risk assets posted gains on signs the outbreak may be levelling off. Amid the rally, the spread between gold futures and spot prices ballooned once again.
"Even though hopes are rising of a slowdown in the pandemic, enough doubt exists to see safe-haven assets in strong demand," Australia & New Zealand Banking Group said in a note. "The tone was set by JPMorgan CEO, Jamie Dimon, who said the outbreak could cause a bad recession."
Futures rallied as much as 2.9 per cent to US$1,742.60 an ounce, the highest level since November 2012, and traded at US$1,729.20 at 8.03am in Singapore. Spot gold was 0.3 per cent higher at US$1,665.85 an ounce, putting the spread between London and New York prices at more than US$60.
To battle the impact of the disease and lockdowns, governments and central banks have unveiled an unprecedented wave of fiscal and monetary support. In the US, Congress's next stimulus bill will be at least another US$1 trillion, House Speaker Nancy Pelosi told Democrats on a private conference call.
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