Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold soared 2.9% to close at a 7-year high near $1,694 as investors sought protection from the economic consequences of the coronavirus pandemic. Underscoring pent-up demand, the strong rally came despite headwinds from a surge in equities.

All three major US stock indexes rose sharply on hopes that the spread of COVID-19 might be leveling off in some deeply affected areas, pulling bargain-hunters back into the markets. The Dow added 7.7% while the S&P 500 climbed 7% and the Nasdaq 7.3%.

New York, the hardest hit state in the US, reported its death rate has plateaued and hospitalizations have decreased. Deaths have also fallen in Spain, Italy, France, and Germany, which are collectively considered a proxy for the pandemic's likely progress in the US.

The news was not so positive in parts of Asia, however, where infections and death rates have risen. Japan will declare a state of emergency for Tokyo and six other regions, while the Bank of Japan is preparing a stimulus package of nearly $1 trillion to cushion the economic impact.

In ordinary times, today's extreme upsurge in risk appetite would pull money away from safe-haven investments like gold. But these times, of course, are anything but ordinary.

The extraordinary amounts of monetary stimulus being unleashed by governments should help to prevent a deep and nasty global recession. But the unprecedented easing is also exploding the global money supply and drastically diluting currencies, raising the specter of sharply higher inflation once the pandemic passes.

Gold is seen as a go-to asset in this environment for protection against currency devaluation and loss of purchasing power. As investors turn hopeful that the pandemic may soon damp out, they are beginning to let go of hoarded cash. Some is going toward risk, some towards safety, driving stocks and gold higher simultaneously.

The other precious metals were mostly higher, with silver and platinum jumping 4.7% and 1.0%, respectively, while palladium slid 1.4%.

At the Comex close: June gold surged $48.20 to $1,693.90; May jumped 68 cents to $15.17; July platinum rose $13.90 to $732; and June palladium dropped $29.20 to $2,076.80 an ounce.