The gold price traded to yet another record high at $1,921 per ounce overnight before moving back toward $1,900 Tuesday morning. The price of gold surged following heavy liquidation in European stock markets on the back of a key election loss by German Chancellor Angela Merkel’s political party. S&P 500 stock futures plunged 27.30 to 1,142 while the cyclically-sensitive copper price, lower by 1.8% to $4.05 per pound, headed for its largest loss in over a month.
The Global Precious Metals Team at TD Securities noted, “Gold has made new all time highs overnight as Eurozone nerves continue to fray and equities feel the heat…Fundamentals remain in place…debt fears, low yields and a weaker USD all serving to keep Gold bid, though recent fresh buying always vulnerable to corrective pullbacks.”
The rally in the gold price follows a 3.1% rise last Friday, when the yellow metal surged following the worse than expected U.S. non-farm payrolls report. As economic data deteriorates across the globe, investors are increasingly moving a greater percentage of their assets into gold as a safe haven and store of value.
Gold equities looked to open the week in positive territory alongside the price of gold. Last week the AMEX Gold Bugs Index (HUI), a basket of the world’s largest gold companies, advanced to a new all-time high of 622.27 and extended its year-to-date gain to 7.8%. On Friday, notable advancers included Barrick Gold (ABX), Goldcorp (GG), and Newmont Mining (NEM) – which climbed 2.3%, 2.6%, and 3.2%, respectively.