Gold Pops as Virus Concerns Ignite Global Stampede Into Havens

The stars have aligned for gold, as concerns that the coronavirus outbreak may damage growth, hurt risk assets and add to pressures for easier monetary policy trigger a global hunt for havens.

Bullion headed for the biggest weekly gain in more than six months as prices hit a seven-year high. With bond yields in retreat and real U.S. interest rates sinking further into negative territory, gold-backed exchange-traded funds have posted a record run of inflows.

“Gold is in the midst of its perfect storm,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S.

Gold sets fresh highs as real yields are at 7-year low

Spot gold climbed as much as 1.2% on Friday to $1,638.11 an ounce, the highest since February 2013. The metal extended this year’s gains to about 8%.

Prices for the traditional haven hit records in other currencies including euros and Australian and Canadian dollars. Holdings in bullion-backed ETFs rose for 22 consecutive sessions to Thursday, the longest ever run, according to data compiled by Bloomberg.

This run of inflows “certainly gives an indication about concerns around the global economy,” Andrew Jamieson, global head of ETF product at Citigroup Inc. in London, said in an interview with Bloomberg TV.

U.S. government bond markets saw a rush of buying Thursday that piled up bets on rate cuts, aiding gold. The Commonwealth Bank of Australia expects the Federal Reserve to ease twice in the second half as the virus threatens the global economy.

Fresh data out of Japan and South Korea on Friday showed how the coronavirus outbreak is taking a toll on economic activity, adding further support to havens.

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