Gold price flirts with $1,800 as pandemic reshapes markets

'Traders and holders of gold are very concerned with upcoming currency values, interest rates and pandemic headlines'

Gold topped $1,800 an ounce Wednesday morning, before giving up its gains, as investors sought to protect their wealth from pandemic-induced declines in other assets.

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Front-month gold futures rose as much as 0.82 percent to $1,807.70 an ounce before rolling over. The precious metal has not closed above the $1,800 level since Sept. 21, 2011.

“Traders and holders of gold are very concerned with upcoming currency values, interest rates and pandemic headlines,” George Gero, managing director at RBC Global Wealth Management and a member of the COMEX board of directors, told FOX Business.

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Open interest, or the total number of futures contracts outstanding, has increased every day for the past month and exchange-traded funds, or ETFs, have been adding to their gold holdings each day for the past month and a half.

Gero believes the buying is a “haven against upcoming inflation,” which he says is “starting to rear its head” after an unprecedented policy response to the steepest economic downturn of the postwar era.

The U.S. economy contracted by 5 percent during the first three months of the year as stay-at-home orders aimed at slowing the spread of COVID-19 brought activity to a near standstill in the final weeks of March. The economy is expected to have contracted by at least 30 percent during the second quarter.

In response to the slowdown, Congress has extended trillions of dollars of aid to businesses and households and the Federal Reserve slashed interest rates to near zero, announced open-ended asset purchases and introduced lending programs to ensure credit availability.

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The shifting financial landscape helped gold climb $209.60 an ounce, or 13 percent, during the April-through-June period, making for the strongest one-quarter performance since the first three months of 2016, according to Dow Jones Market Data Group.

The precious metal has gained ground in each of the past seven quarters, climbing $601.50 -- or 50 percent -- over that time. It's in the midst of its longest winning streak since the third quarter of 2011 – when it advanced for 12 straight quarters.

While Gero says gold will eventually beat its record high of $1,888.70 on Aug. 22, 2011, he believes it could take a while.

“That’ll depend a lot on what happens between now and November in the U.S. with elections,” he said. “You're going to see a lot of pro and con political headlines.”