Gold Surges as Chinese Return from National Holiday

Fri 09 Oct 2020 | 08:57 PM

Taarek Refaat

Gold prices rose on Friday as China returned from the week-long National Day holiday, and US President Trump urged a new round of COVID-19 stimulus spending from Congress.

The reopening of Shanghai Gold Exchange saw bullion plummet in China - the number one consumer market for the metal, back from the National Day holiday at ¥ 404 a gram, the highest level since the steep decline in mid-September.

Gold approached its highs in two weeks on Friday below $ 1929.9 - the highest level the precious metal has ever recorded from 2011 until August's rally to $2,075.

Despite the potential for more record borrowing from the Treasury whether Trump or Biden wins the elections next month, long-term interest rates have fallen in the meantime, erasing the rally in the past two weeks to reach their lowest, making gold more profitable for investors.

"Gold prices are actually affected by U.S. elections," says a note from Canadian brokerage TD Securities, adding that both administrations are likely to push through a large-scale fiscal deal at any given time.

Trump's sudden refusal to allow any new stimulus package has raised concerns that the U.S. might lose economic momentum and these concerns halted a renewed rise in inflation expectations that underpinned the recent strength in gold prices, yet, with a new package headlined, gold can head to the summer's all time high.

Gold has risen in 2020 due to massive stimulus from the FED, and if this continues, it will support gold further.

In Egypt, Gold prices continued to rise today, Friday, and the 21-karat jumped by about EGP 9 at once, compared to the price level at the beginning of morning trading.