Gold prices continued to rally on June 22, heading toward the highest since February 2012, after massive inflows into gold-backed exchange-traded funds (ETFs) in the United States.
Gold for delivery in August, the most active contract on the Comex market in New York, touched a high of US$1,779 per oz., the highest since February 2012.
The World Gold Council reported that June 19 saw a massive 27.3 tonnes (974,000 oz., worth over US$1.7 billion) inflow into gold-backed ETFs.
The world's largest gold ETF - SPDR Gold Shares (GLD) - received the lion's share, with inflows of 23.1 tonnes, or 742,492 oz., on June 19, coinciding with the expiry of June GLD options.
According to a note from BMO Capital Markets, the haul on June 19 takes month-to-date inflows to 55.6 tonnes (1.96 million oz.), with the vast majority of demand coming from North America.
Gold prices have rallied more than 16% so far this year, supported by the rolling out of massive monetary stimulus from central banks around the world in response to the economic fallout of the Covid-19 pandemic.
Gold is often seen as a safe haven asset for global investors during times of economic turmoil, and with the number of coronavirus cases rising in some areas after governments began to loosen their lockdown protocols, overall economic uncertainty remains high.
On June 21, the World Health Organization reported a record jump in global Covid-19 infections, with the biggest increases seen in North and South America.
Additional monetary stimulus to combat the pandemic, including the Bank of England's bond buying program announced last week, could lend further support to bullion as a hedge against inflation.
"Gold appears poised for breakout," Fawad Razaqzada, market analyst at ThinkMarkets in London, said in an emailed note to Bloomberg. "While gold is undoubtedly boosted by haven flows due to the economic damage caused by the pandemic as well as concerns over a second wave, there is little doubt that the metal is also finding good support from central bank money flooding the financial markets."
Ole Hansen, head of commodity strategy at Saxo Bank A/S, shares a similar sentiment:
"Covid-19 worries together with the eventual inflationary impact of central bank stimulus are providing the support for gold," he said.
- This article first appeared in MINING.com. The Northern Miner and MINING.com are part of Glacier Resource Innovation Group.