By Barani Krishnan
Investing.com – Goldman Sachs’ $1,800 bet, fears of another Covid-19 spike, and a stimulus-friendly Federal Reserve are coming together in gold’s defense, despite the yellow metal’s slide on Wednesday from a one-week high.
for August delivery settled down $1.20 at $1,720.70 per ounce after scaling $1,734.95 during the session, their highest since June 3.
, which tracks real-time trades in bullion, slipped 36 cents, or 0.02%, to $1,714.24 by 1:15 PM ET (17:15 GMT). It hit a one-week high of 1,727.18 earlier.
Gold’s run-up earlier in the session came after Goldman said it expects the yellow metal to reach $1,800 per ounce on a 12-month basis. The Wall Street firm, whose calls on commodities are often closely followed, also said gold had potential to arch beyond $2,000 from the tail risk of above-target inflation.
While it came off its highs, gold’s downside risk was limited by expectations that the Fed was nowhere near to raising rates or ending its multiple stimulus programs designed to steer the U.S. economy though Covid-19 recovery. The central bank is due to announce its monetary policy decision for June at 2:00 PM ET, and it is expected to keep interest rates at near zero.
In another development boosting gold’s safe-haven edge, new U.S. data shows hospitalizations for the coronavirus accelerating in at least nine states since last month’s Memorial Day holiday. In Texas, North and South Carolina, California, Oregon, Arkansas, Mississippi, Utah, and Arizona rising numbers of COVID-19 patients are showing up at hospitals, the Washington Post reported.
“The Fed is in a holding pattern and new COVID-19 cases are a risk that is not going away anytime soon and that focus could grow over the coming days,” said Ed Moya, an analyst at New York’s OANDA. “Gold has a plethora of fundamental catalysts that could help trigger the climb back towards the $1,800 level.”
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by : Investing.com