Gold reached its highest value since October 2012

Gold futures surged to their highest prices in almost eight years on Thursday. The Federal Reserve announced new landing programs aiming to support the hit to the economy from the Coronavirus pandemic. It resulted in a decline in the US dollar, and subsequently, boosted gold prices. 

June futures of gold on Comex climbed 4.1%, or $68.50, to close at $1,752.80 an ounce. According to FactSet data, it is the highest most-active contract settlement since October 2012. For the week, the precious metal increased by approximately 7%.

O’Byrne: Financial crisis was inevitable even before the Coronavirus

The Federal Reserve set up new loan programs and reinforced existing ones to provide $2.3 trillion in support for the economy, virtually shut down due to the Coronavirus.

Jerome Powell, Fed Chairman, said in a statement that the central bank is trying to provide as much relief and stability as it can while Americans are staying at home to stop the pandemic from spreading.

Jeff Wright, executive vice president of GoldMining Inc., said that the take away for gold was significantly bullish, and it would lead over the long term to a much weaker US dollar. The Fed is trying to reopen the American economy quickly. Still, the knock-on effect will be a long term weak US dollar. This puts gold in a favorable position, Wright stated.

Data on US jobless claims climbed up 6.6 million in the first week of April, and in less than a month, it brought total job losses to 16.8 million. 

Mark O’Byrne, research director at GoldCore, stated that an economic, monetary, and financial crisis was inevitable even before the Coronavirus panic. The pandemic accelerated and exacerbated this impending crisis. Gold has delivered a 12% dollar return in the 2020 year so far. This outperformance will continue in the coming months and years, O’Byrne said. He believes that a gold value of $5,000 is quite possible in the next year or two.

The US Dollar Index was down 0.6%. Craig Erlam, senior market analyst at Oanda, in a daily research report, wrote that cash from central banks around the world is flooding the market. 

In May, silver gained 84.8 cents, or 5.6%, to settle at $16.053 an ounce. For the week, the white metal increased by about 9.6%.

Among other metals traded on Comex, May copper ended with little change, down 0.02% at $2.2595 a pound. In July, platinum rose 2% to $748.60 an ounce, but June palladium climbed 0.7% to $2,110 an ounce.

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