Gold approaches 9-year peak

 

Gold prices on Tuesday climbed to a nearly nine-year high as investors continued to seek refuge in the precious metal as a safe haven amid surging Covid-19 infections worldwide.

 

The local gold price climbed at a moderate pace as the baht strengthened against the US dollar.

 

The price of gold peaked at US$1,824.5 an ounce on Tuesday, the highest level since September 2011, as global infections surpassed more than 14.8 million cases and over 613,000 deaths.

 

The SPDR fund bought 4.97 tonnes of gold on Monday after buying 6.43 tonnes last week.

 

Gold was lifted by a weaker US dollar and fireworks in silver, which climbed 3% to $19.33 an ounce overnight, said Jeffrey Halley, senior market analyst for Asia-Pacific at forex firm Oanda.

 

"A move through $1,820 an ounce [for gold] should see more stop-loss sellers, as well as model-driven buyers, hit the market," Mr Halley said. "That could lead to a reasonably rapid spike by gold into the mid-1,830s an ounce, reinvigorating gold's rally."

 

Jitti Tangsithpakdi, chairman of the Gold Traders Association and owner of Chin Hua Heng Goldsmith, said gold continues to rise because of the weaker dollar and the global economic slowdown.

 

If the economic downturn does not reverse, gold will remain as a safe-haven asset, Mr Jitti said, adding that the pandemic and foreign exchange volatility have contributed to the surge in prices.

 

On the domestic front, gold edged up to 27,300 baht per baht-weight as the baht strengthened to 31.67 against the dollar at press time, up from 31.80 on Monday.

 

"Gold, as a safe haven when the global economy is in downturn, is investible because the price continues to be on an upward trend supported by the uncertainty of the Covid-19 pandemic and progress towards a vaccine," said MTS Gold chairman Kritcharat Hirunyasiri.

 

Mr Kritcharat said investors should invest with caution and buy gold when the price falls to $1,805 for global spot and 27,000 baht for domestic gold.

 

Tanarat Pasawongse, chief executive of Hua Seng Heng Group, said global gold prices in the medium term are expected to move upward, while sideways movement is anticipated in the short term, with a resistance line at $1,830-$1,850.

 

For gold futures investors, the resistance line is 27,610 baht and the support line is 27,100 baht, he said.