Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold surged another 1.5% to close near $1,844, the highest level in nearly nine years, after a historic coronavirus rescue package from the European Union hammered the dollar, rallied oil, and spurred demand for alternative assets. Silver skyrocketed 6.8% to a six-year high of $21.56.

After four days of intense negotiation, EU leaders agreed to a $858 billion rescue package to rebuild the eurozone economy from covid-induced damage. The 27-nation union also established to a $1.3 trillion combined budget for the next seven years, leaving no doubt of its intention to strengthen fiscal cooperation.

Unlike the US, which has seen all 53 states and territories post rising infections over the past 14 days, including record-high numbers in many regions, Europe has largely contained the spread, leading to successful reopening of much of its economy.

The massive stimulus package stoked global risk appetite, driving the Global Dow nearly 1% higher.

The dollar plunged 0.7% against major rivals led by the euro, which leapt to an 18-month high. A falling dollar supports gold and other commodities by making them less expensive in other currencies.

Oil prices also surged on the EU news, with WTI crude adding 2.3% on expectations that economic recovery in the eurozone will increase demand. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

Silver's impressive recent rally comes as little surprise, given that it trades both as an industrial commodity and safe-haven asset. With prospects brightening for Europe and China, industrial demand is beginning to strengthen. At the same time, massive global stimulus and dimming prospects for the US recovery continue to drive safe-haven demand.

Gold has gained 21% for the year while silver, playing catch up, has now risen around 20%.

The other precious metals were also sharply higher. Platinum rising 7.1% to a four-month high while palladium added 3.7% reach the highest level in three months.

At the Comex close: August gold rose $26.50 to $1,843.90; September silver jumped $1.37 to $21.56; October platinum climbed $61 to $918.90; and September palladium picked up $78.80 to $2,188.20 an ounce.