Gold hits 7.5-year peak

By: AFP      Published: 05:19 PM, 18 May, 2020
Gold hits 7.5-year peak

World stock markets rose Monday on a further easing of coronavirus lockdowns around the world, sending US oil prices back above $30 per barrel, but haven investment gold hit a 2012 pinnacle on festering economic fears, dealers said.

In Asia, Hong Kong closed up 0.6 percent, Shanghai won 0.2 percent and Tokyo jumped 0.5 percent. The positivity spilled over into Europe, with Frankfurt, London and Paris rising sharply approaching the half-way mark.

US oil prices topped $30 per barrel on an improving demand outlook, while the dollar also rose on haven demand.

"Equities and oil are higher as investors cautiously welcome signs lockdowns are ending -- but markets remain in this tug-of-war pattern where we simply do not know whether the damage will be a lot worse than feared or the recovery will be much swifter," said analyst Neil Wilson at trading site Markets.com.

"Gold has emerged as a clear winner from the economic turmoil created by the pandemic," Wilson added after gold hit $1,765.19 per ounce -- the highest level since October 2012.

The British pound however dipped after Bank of England chief economist Andy Haldane hinted in an interview at negative interest rates, with UK borrowing costs currently pegged at just 0.1 percent.

The BoE has already forecast that Britain will endure its worst recession for centuries. "Given the scale of the economic crisis that Britain is entering into, it may be wise for investors to keep an open mind as to monetary policy developments over the next year or so in the UK and beyond," said Rabobank analyst Jane Foley on Monday.

"This factor, combined with Brexit risks and criticism of the (UK) government on its handling of the COVID-19 crisis, suggest the potential for further pressure for the pound."

Traders meanwhile brushed off a warning from the head of the Federal Reserve that a full recovery would likely not come until next year -- and a vaccine would be needed to get things back to normal.

With infection and death rates falling in some of the worst-hit countries, governments are slowly allowing businesses to re-open and people to venture out again, with top-tier football returning in Germany -- albeit in empty stadiums.

California's governor said the state was 75 percent up and running, New York is also lifting the shutters in some regions, and Apple said almost 100 of its stores were now open. The equity gains come despite a flurry of downbeat economic data, including Monday's news that Japan had fallen into its first recession since 2015.

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