The price of gold hit a new all-time high on Monday, extending a recent rally driven by weakness in the dollar.
Gold (GC=F) was up 2.1% to $1,937.30 (£1,504.81) per ounce in early trade in London. The precious metal rose above $1,941 earlier in the session to hit a new all-time high.
“Today it is all about gold prices and bulls are celebrating the fact that the gold price has hit an all time high,” said Naeem Aslam, chief market analyst at Avatrade.
Gold and silver prices have been rallying in recent weeks as the US dollar has weakened. The dollar has fallen over 4% against both the pound (USDGBP=X) and the euro (USDEUR=X) over the last month. The decline of the dollar has coincided with huge spikes in COVID-19 cases in many US states, such as Florida and Texas.
The cheap dollar appears to have spurred investors to move their money into precious metals in a bit to preserve the value of their capital. Silver (SI=F) was also rallying strongly on Monday, up 7.3% to $24.52 per ounce.
“The next big target [for gold] is the 2,000 level and this can happen this week as we have the Federal Reserve’s meeting,” Aslam said.
The Federal Reserve delivers its latest policy statement on Wednesday (29 July), which could send the dollar lower if the central bank signals weak expected growth for the US economy.
European stock markets were lower across the board, following a cautious session in Asia overnight. The FTSE 100 (^FTSE) was down 0.3% by mid-afternoon, while the CAC 40 (^FCHI) lost 0.3%. The DAX (^GDAXI) was flat.
In Spain, the IBEX 35 (^IBEX) fell 1.8% after the UK re-introduced a 14-day quarantine for holidaymakers. Travel agent Tui cancelled flights to Spain in response. New COVID-19 cases in Spain rose above 1,000 a day the last week.
“I don’t think this is of immediate major economic consequence (relative to what we already have) but if this is happening at the height of summer it begs the question of where we’ll be in say November,” Deutsche Bank senior strategist Jim Reid and team wrote in a note to clients on Monday morning.
Travel stocks were hit hard by the Spanish quarantine news. IAG (IAG.L), the owner of British Airways and Spain’s Iberia, fell 7.3% to the bottom of the FTSE. In Frankfurt, Lufthansa (LHA.DE) dropped 6.2%.
In Asia, Japan’s Nikkei (^N225) and the Hong Kong Hang Seng (^HSI) both slipped 0.1%, the Shanghai Composite (000001.SS) was flat, and the Shenzen Component (399001.SZ) rose 0.1%. In Australia, the ASX 200 (^AXJO) rose 0.3%.
US stock markets opened higher amid optimism that another $1tn stimulus package could be signed off by lawmakers in Washington. The S&P 500 (^GSPC) was up 0.5% after half an hour of trade, while the Dow Jones (^DJI) was up 0.3% and the Nasdaq (^IXIC) had gained 1.2%.
Listen to the latest podcast from Yahoo Finance UK