Sino-US Tension Pushes Gold To Record High

Gold soared to a record high on Monday as investors rushed into the safe-haven commodity on concerns about heightened China-US tensions, spiking virus infections and a lack of progress on a new stimulus bill in Washington.

"Always a sign of trouble, gold continued its red hot streak on Monday, the safe haven commodity looking mighty attractive after another troubling weekend of Covid-19 and US-China headlines," said Spreadex analyst Connor Campbell.

US dollar weakness was a big factor behind gold's takeoff, analysts said, as the greenback continued its retreat against the euro and other major currencies.

The fall in the US currency comes amid expectations that the Federal Reserve will keep interest rates lower for longer and that the economy could underperform those in other regions due to the coronavirus.

"A further escalation of tensions between China and the US, with the tit-for-tat embassy closure, was the most obvious reason for the change in market tone," said Rupert Thompson, chief investment officer at Kingswood.

"But the continuing uncertainties over the prospects for the economic recovery may also have contributed," he said.

The gold price hit an all-time high of US$1,945.72 per ounce, well above its previous record of US$1,921.18 in 2011. It later pulled back somewhat. Prices of the yellow metal have jumped more than 25 percent this year.

Relations between the world's two superpowers took another negative turn when the US mission in Chengdu was ordered to shut in retaliation for the forced shutdown of the Chinese consulate in Houston, Texas.

"Technically, the superpowers are all-square in this specific tete-a-tete – but investors are worried about what comes next," said Campbell. (AFP)