UPDATED: 3:30pm EST
The gold price rallied again on Thursday as investors seek a store of value after the Fed said it’s pumping another $2.3 trillion in the US economy to stave off depression.
On the Comex market in New York, gold for delivery in June, the most active contract, jumped to the highest since November 2012 at $1,754.50 an ounce in afternoon trade, up just over $70 an ounce, or 4.2% compared to Wednesday’s close.
Fed Chairman Jerome Powell said that the bank was committed to use its powers “forcefully, pro-actively, and aggressively until” the US economy is “solidly on the road to recovery.”
Powell’s comments in a prepared speech delivered virtually followed data showing jobless claims in the US surging by more than six million for the second week in a row, prompting fears that unemployment could reach more than 15%.
Last month, Goldman Sachs said inﬂationary concerns triggered by the central bank policy response to the pandemic could send gold to $1,800 an ounce as the currency of last resort.
“We believe physical inflationary concerns with the dollar starting near an all-time high will for once dominate financial asset inflation that was a feature of the past decade.”
Bloomberg reports the gap between New York futures and spot prices in London for physical bullion have widened to roughly $40, a sign of lingering concern over future supply and the difficulty of shipping bars around the world amid the pandemic:
“People are paying the premiums over in the physical market and I think it’s rolling into the futures,” said Peter Thomas, a senior vice president at Chicago-based broker Zaner Group. “It’s safe-haven buying. People are scared.”
Global gold-backed exchange-traded funds (ETFs) had $23 billion, or 298 tonnes of net inflows in Q1 2020 – the highest quarterly amount ever and the largest tonnage additions since 2016, the World Gold Council said in its latest report.
During the past year, gold ETFs added 659 tonnes, the highest on a rolling annual basis since the financial crisis, with assets under management (AUM) growing 57% over the same period.
For the month of March, gold ETFs added 151 tonnes for a net inflow of $8.1 billion, boosting holdings to a new all-time high of 3,185 tonnes.