Leonhard Foeger | Reuters
Gold prices rose to an all-time high on Friday as investors began to seek security in precious metals amid growing tensions between the US and China and continuing concerns about the coronavirus pandemic.
The metal's August futures contract rose 0.4% to $ 1,897.50 an ounce, the CME Group said. It was also the sixth consecutive day that gold made profits. Gold also had a seven-week winning streak.
Tensions between China and the US have increased this week. Overnight, China ordered the United States to close the Chengdu consulate. Earlier this week, the US closed a Chinese consulate in Houston.
"Tensions between the US and China continue to escalate, leading to market risk reduction on Thursday and Friday," said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a note. He pointed out that gold is again one of the best performing assets this year and has risen by more than 24%. He also said that political uncertainty is likely to continue throughout the year, which he predicts gold could rise to $ 2,000 an ounce.
Haefele also pointed out that the rise in the price of gold is happening as the US dollar has fallen sharply recently. The dollar index, which measures the performance of the greenback against six other currencies, has dropped more than 1% this week and has been falling for five consecutive weeks.
"While we believe gold will continue to be supported by increasing geopolitical tensions, we believe the main drivers of the gold price are its negative correlation with real interest rates and the dollar," he said.
Gold also wins if the coronavirus pandemic continues to devastate the global economy. Data compiled by Johns Hopkins University showed that more than 15 million coronavirus cases have been confirmed worldwide.
In the U.S. alone, over 4 million infections and at least 144,552 deaths have been reported. Several states and countries have had to postpone or reverse plans to reopen as cases continue to increase.
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