Gold tops $1 600 as virus fuels growth fears

Fears that the coronavirus could be a disaster for the global economy and a drumbeat of speculation over central bank stimulus are driving another rally in precious metals.

Gold surpassed $1,600 an ounce this week and is closing in on an almost seven-year high. Prices added another 0.5% on Wednesday.

The most surprising metal remains palladium, which shot up 6% to $2,785 an ounce. Palladium, which traders consider a quasi-industrial and precious material, is up 14% this week as speculators bet on future supply shortages.

“There is a lot of stock market money looking for a safe haven and finding it in gold,” said David Govett, head of precious metals trading at Marex Spectron Group in London. “One keeps thinking there must be a top somewhere, but I don’t think we have found it yet.”

Silver added 1% and platinum gained 2.3% today.

Companies from Apple Inc. to Adidas AG are starting to account for the economic damage of the coronavirus, which has already killed more than 2,000 people. At the same time, traders are paying more attention to the possibility of central bank easing in the coming months.

The Fed has said the effects of the virus have presented a “new risk” to the outlook and traders will study minutes from the latest meeting, due later Wednesday, for any hint of a dovish tone.

The supply deficits in palladium and rhodium are likely to persist, said Neal Froneman, the chief executive officer of Sibanye-Stillwater Ltd., the world’s largest platinum miner.

Stricter vehicle emissions standards are spurring more demand for the metals, which are used to clean toxic car fumes, he said.

“There is nothing on the horizon to change the direction of these shortages,” Froneman said at a presentation in Johannesburg.

© 2020 Bloomberg L.P.

Source: moneyweb.co.za