Gold pierces $1,800 barrier in run to nine-year peak as virus woes mount

An employee takes granules of 99.99 percent pure gold at the Krastsvetmet non-ferrous metals plant, one of the world's largest producers in the precious metals industry, in the Siberian city of Krasnoyarsk, Russia

Gold breached $1,800 an ounce on Wednesday for the first time since 2011 as mounting fears over the fast global spread of the coronavirus sent investors scurrying for safe havens.

Spot gold rose 0.4% to $1,802.15 per ounce by 1217 GMT, after hitting its highest since November 2011, at $1,804.41, earlier in the session.

U.S. gold futures rose 0.2% to $1,814.10 per ounce.

European shares edged lower as soaring COVID-19 cases dented hopes of a swift economic recovery.

“Investors are hedging their exposure to riskier assets simply because there’s a growing and widening belief that any recovery is unlikely to be v-shaped,” said Michael Hewson, chief market analyst at CMC Markets UK.

“Markets generally tend to operate through a prism of optimism and that optimism is being tested at the moment and gold is benefiting from that.”

The United States has exceeded 3 million coronavirus infections, while cases also grew worldwide.

Adding to the economic worries, U.S. Fed officials expressed concern that the surge threatened to pinch consumer spending and job gains.

The European Commission also forecast the euro zone would drop deeper into recession this year.

However, in the medium to longer-term, an improvement in the economic backdrop could weigh on gold, Julius Baer analyst Carsten Menke said in a note, pointing out that safe-haven demand has been the strongest in countries hit the hardest, such as the U.S. and the UK.

Mirroring appeal for the metal, prices of which have rallied nearly 19% so far this year, gold-backed exchange traded funds added 104 tonnes of bullion worth $5.6 billion in June, the World Gold Council said on Tuesday.

SPDR Gold holdings rally to over 7-year high on COVID-19 fears here

“The health, financial and economic uncertainties generated by the COVID-19 pandemic and its aftermath are likely to continue to support gold’s rally well into 2021, but at a reduced level,” HSBC analysts said in a note.

Palladium rose 0.5% to $1,925.30 per ounce, platinum also gained 0.1% to $836.35 per ounce and silver rose 0.7% to $18.42 per ounce.

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