Gold hits $1,800 an ounce, first time since 2011

Gold prices on Wednesday breached the $1,800 an ounce barrier for the first time since 2011, as investors opted for safe-haven commodity amid mounting fear of rising coronavirus cases.

Spot gold rose 0.4 per cent to $1,802.15 per ounce by 1217GMT, after hitting its highest since November 2011, at $1,804.41, earlier in the session. US gold futures rose 0.2 per cent to $1,814.10 per ounce.

Analysts and experts said that the yellow metal is expected to sustain an upward trend in the coming weeks, due to growing concern that the surge in worldwide coronavirus cases has threatened to pinch consumer spending and job gains after easing restrictions on travel movement. They said that a weaker dollar also made the metal priced in the US unit attractive to investors.

"Technical traders enter the market while safe-haven demand stays strong, in particular in countries which are hit the hardest by the coronavirus," Carsten Menke, head of Next Generation Research, Julius Baer, said.

He said that short-term price risks remain skewed to the upside as long as the virus does not come under control. "Medium to longer-term, we still believe that an improvement of the economic environment should weigh on safe-haven demand, leading prices lower," he said.

Gold prices have rallied nearly 19 per cent so far this year on rising demand from the investors. The World Gold Council also said on Tuesday that gold-backed exchange traded funds added 104 tonnes of bullion worth $5.6 billion in June.

"Finally, gold is flirting with $1,800 per ounce on the back of souring market mood. Solid offers are eyed near and above this level," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Gold's record-high stands at $1,921.18 an ounce.

In a research note, Menke pointed out that safe-haven demand has been the strongest in those countries which are hit hardest by the coronavirus outbreak.

"Coincidence or not, safe-haven demand has been the strongest as of late in countries which are hit the hardest by the coronavirus, such as the US and the UK. It has been much more muted in countries which have lifted lockdowns successfully, such as Germany or Switzerland," he added.