Gold Drives Toward Highest Since 2012 on Virus Resurgence Concern – by Justina Vasquez and Elena Mazneva (Bloomberg News – June 22, 2020)

(Bloomberg) — Spot gold settled at the highest since 2012, supported by concerns over a second wave of coronavirus infections and ongoing expectations of a flood of stimulus measures.

There are increasing signs that the virus is continuing to spread as governments work to reopen their economies. The metal also was boosted by stimulus measures, including the Bank of England adding to its bond buying program last week and the Federal Reserve signaling rates will remain low.

Increased amounts of monetary stimulus tend to support zero-yield gold as a hedge against declining interest rates.

“While gold is undoubtedly boosted by haven flows due to the economic damage caused by the pandemic as well as concerns over a second wave, there is little doubt that the metal is also finding good support from central bank money flooding the financial markets,” Fawad Razaqzada, market analyst at ThinkMarkets in London, said in an emailed note.

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