Gold News & Info

Source:Bill Musgrave, American Gold Exchange

AustinExtending last week's rally, gold gained another 0.7% to close above $1,814 as surging coronavirus cases stoked expectations of additional government stimulus, undercutting the dollar and lifting demand for alternative stores of value. The metal rose 0.7% last week for its fifth straight weekly increase.

Coronavirus cases and deaths increased across many states over the weekend, with Florida reporting 15,000 new infections in a 24-hour period, the most by any state during this pandemic. Hospitalizations have sharply risen, and more governors are walking back plans for reopening.

Dallas Fed President Robert Kaplan warned today that the resurgent virus is squelching economic recovery, reversing the growth trend that began in late April and early May, when lockdown restrictions were eased. Kaplan is a voting member of the Federal Open Market Committee, which sets policy for interest rates and monetary easing.

Kaplan's comments reinforced expectation that the Fed will undertake additional stimulus to cushion the economy from yet more COVID-19 fallout. The central bank has already pledged unlimited quantitative easing, increasing its balance sheet by nearly $3 trillion since February, and pledged to keep interest rates near zero until 2023.

Fiscal stimulus is also reaching record dimensions. The federal budget deficit skyrocketed to $864 billion in June, a monthly record, on government programs to support small businesses and laid-off workers because of coronavirus closures. The Treasury Department projects an annual deficit of $3.7 trillion, also a record.

Such extreme monetary stimulus is bullish for gold because it devalues the dollar and increases the risk of long-term inflation. Gold rallied to its all-time high above $1,900 in October 2011 behind the Fed's use of quantitative easing and low interest rates to rescue the economy from the recession following the financial crisis of 2009.

The other precious metals were also higher, with silver jumping 3.9% while platinum and palladium added 2% and 2.3%, respectively.

At the Comex close: August gold gained $12.20 to $1,814.10; September silver jumped 73 cents to $19.79, the highest level in nearly four years; October platinum climbed $17.10 to $863; and September palladium picked up $46.50 to $2,040.90 an ounce.