Price of gold soars as dollar falls on prospect for further $1trn stimulus in US            

Price of gold soars as dollar falls on prospect for further $1trn stimulus in US            

The price of gold touched a new record as the dollar fell again. Picture: AP Photo/Seth Wenig

Investor hopes for further measures to lift the US economy from its Covid-19 slump lifted global stock markets even as cases of the disease continued to spike in several regions. 

The price of gold touched a new record as the dollar fell again. 

European stocks had started the day underwater as airline and travel companies were hit by the health quarantine imposed by Britain on passengers from Spain, while Ryanair's outlook for the summer and beyond did little to lift the gloom. 

However, US stocks turned upward again amid talk of additional $1 trillion in stimulus.                                        

"Even the ongoing spike in US virus cases has not proven to be a major block to more gains, with investor sentiment bolstered by hopes that the US can put together a new stimulus programme that will help to provide further support to hard-pressed consumers, even if it does not quite match the existing efforts," said Chris Beauchamp, the chief market analyst at online broker IG.   

Eurostoxx index and the Ftse-100 ended little changed and, in Ireland, shares were mixed. AIB closed 2.2% lower and insurer FBD, which reports earnings later this week, fell 3%. Travel shares Ryanair and Irish Ferries-owner ICG closed 5.5% and 4% lower.          

Meanwhile, gold stormed to a record high as investors sought refuge from the possible hit to a pandemic-stricken global economy from an escalation in the US-China spat, which pummelled the dollar.

“The dollar is losing its safe-haven appeal and you’re going to continue to see gold surge as the dollar sinks,” said Edward Moya, senior market analyst at broker Oanda.

“Everything is clicking for gold. There are high prospects the Federal Reserve is going to ramp up their efforts to repair the economy and the virus uncertainty is going to mean that the stimulus trade is going to remain,” Mr Moya said. 

Spot gold hit a record high of $1,944.73 per ounce. Silver also rallied jumping as much as 8% to $24.57, its highest since August 2013.

Gold has risen 28% so far this year marking a shift from before the pandemic, when the bullion had to compete with other safe havens such as the dollar, especially amid China-US tensions, which had limited inflows into gold.

Non-yielding gold is considered a hedge against inflation and currency debasement, with analysts also pointing to massive inflows into gold-backed exchange-traded funds as a driver behind its rally. 

-Additional reporting Reuters

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