Gold Heads for Biggest Weekly Gain Since 2020 on Haven Demand

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Gold Heads for Biggest Weekly Gain Since 2020 on Haven Demand.

commodities :: 22hrs ago :: source - bloomberg

By Jack Ryan and Sybilla Gross

(Bloomberg) -- Gold headed for its biggest weekly gain in five years, surging along with silver as fears about credit quality in the US and tensions with China add fuel to this year’s flight to safety.

Bullion hit a fresh all-time high near $4,380 an ounce on Friday, extending this week’s breakneck rally to roughly 8%, the most since March 2020. The gain of more than $300 this week is the biggest on record in dollar terms. Silver also hit new highs.

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Loan blowups in the US and renewed trade friction between the world’s top economies are just the latest worries luring investors into precious metals. Geopolitical risks, ballooning public debt and threats to the Federal Reserve’s independence have also stoked demand for haven assets.

Gold’s more than 60% surge this year is underpinned by central-bank buying and inflows to exchange-traded funds. Traders are also piling into wagers on at least one jumbo US rate cut by year-end. That would benefit precious metals, which don’t pay interest.

Silver this week smashed through a peak set in 1980 on a now-defunct contract overseen by the Chicago Board of Trade and is up more than 85% this year. Prices for the white metal hit a fresh high near $54.50 an ounce on Friday, before erasing gains.

The last two weeks have seen the London silver market tighten dramatically, propelling prices well above New York silver futures and leading traders to fly metal across the Atlantic. The historic squeeze in London sparked a worldwide hunt for the metal, with its one-month annualized borrowing costs sitting around 20% on Friday.

Over the past week, more than 15 million ounces of silver have been withdrawn from warehouses linked to the Comex futures exchange in New York. Much of that is likely headed to London, where it should help ease tightness, as will a hefty 10 million ounce outflow from silver backed exchange-traded funds on Thursday. The price gap between the two trading hubs remains unusually wide at $1.20 an ounce, though that’s narrower than a spread of as much as $3 last week.

Spot Silver edged 0.3% lower to $54.07 an ounce as of 11:23 a.m. in London, but remains up 7% for the week. Gold was up 0.3%% to $4,339.14 an ounce. Platinum and palladium retreated.