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In the morning trade, gold futures for August changed their direction and moved to the downside. Gold prices went slightly lower after reaching their highest levels since 2011. The shift in direction came amid investors' doubts over a quick recovery of the global economy.
In the early trade, gold fell by 0.17% and reached the level of 1,806.7 dollars per troy ounce. Gold found support at around 1,766.3 dollars per troy ounce, while resistance was set at 1,810.8 dollars per troy ounce. By the end of the previous session, the price of the precious metal jumped to the level of 1,809.9 dollars per troy ounce which was last recorded back in September 2011.
The enthusiasm for gold grew on investors' fears that global markets could fail to withstand the growing danger of the second wave of the coronavirus pandemic. Market participants are losing interest in risk assets and are turning their attention to a safer area of ETFs funds backed by gold.
The safe haven of precious metals is becoming more appealing amid the worsening epidemiological situation. The weakening global economy may come under more pressure if the lockdown measures are re-imposed worldwide. Investors are not going to wait for the worst and are moving away from risk assets that were so popular a few days ago.
Meanwhile, the world economy continues to contract. Therefore, global regulators resort to easing of the monetary policy and introducing new stimulus measures which add to the rise of precious metals.
Gold-backed ETFs showed rapid growth in the first half of the year, closing with a record net inflow of 734 tons. The total investment amounted to 39.5 billion US dollars. These numbers indicate an unprecedented growth both in physical terms and in value. In 2009, gold deposits amounted to 646 tons while in 2016 the amount approached 23 billion dollars. This year, however, all records have been beaten. And we can expect another steep rise in gold prices until the end of 2020.
The main factors to support the surge in gold prices include low interest rates introduced in most countries and the weakening US dollar. Recently, the fall of the greenback has become even more evident.
In the early trade, silver futures for September were up by 0.38%, settling higher at the level of 18.628 US dollars per troy ounce.
Copper futures for September also followed the positive dynamics and rose by 0.34%, hitting the level of 2.7963 dollars per pound.
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