Gold forges record high as investors seek safety

LONDON — Gold soared to a record high on Monday as investors rushed into the safe-haven commodity on concerns about heightened China-US tensions, spiking virus infections and a lack of progress on a new stimulus bill in Washington.

"Always a sign of trouble, gold continued its red hot streak on Monday, the safe haven commodity looking mighty attractive after another troubling weekend of COVID-19 and US-China headlines," said Spreadex analyst Connor Campbell.

Dollar weakness helped send gold flying, after vast monetary easing measures put in place by the US Federal Reserve (Fed) undermined confidence in the greenback.

The gold price hit an all-time high of $1,944.71 per ounce, well above its previous record of $1,921.18 in 2011. It later pulled back somewhat.

Relations between the world's two superpowers took another negative turn when a US mission in Chengdu was ordered to shut in retaliation for the forced shutdown of the Chinese consulate in Houston, Texas.

 'Worried what comes next' 

"Technically, the superpowers are all-square in this specific tete-a-tete — but investors are worried about what comes next," said Campbell.

After months of strong gains across equity markets — fuelled by trillions of dollars in government and central bank support — traders had already begun to step back, weighing the long-term economic impact of the coronavirus.

Eyes are on the Fed's policy meeting this week, with some predicting further measures to boost the economy — possibly negative interest rates — that could put more pressure on the dollar and send gold above $2,000.

There are also concerns that a worse-than-forecast reading on second-quarter US gross domestic product could spark another dollar sell-off.

The euro hit its highest dollar value since September 2018.

As gold rose, stock markets — a riskier investment — wobbled with investors fretting over the impact of the virus on the economy.

.In Europe, only Frankfurt held on in a sliver of positive territory after a key survey showed that German business confidence rose for the third month in a row in July. London and Paris were both lower.

On Wall Street, the Dow was also a touch weaker at the opening bell.