Investors sought safety on coronavirus pandemic worries, driving gold prices above $1,800 an ounce for the first time since 2011 in international and local markets.
In New York, spot gold rose 0.81 percent to $1,808.74 an ounce, its highest since November 2011. US gold futures settled 0.6 percent higher at $1,820.60 an ounce.
In the UAE, according to the Dubai Gold and Jewellery Group’s latest figures, 22 karat price touched Dh. 206 per gram, while 24 karat was Dh. 219.15.
Local media reported that the peak in gold prices in Dubai, historically reputed for its gold market, was in September 2011 when it touched Dh. 215 a gram for 22 karat.
European shares opened lower as soaring Covid-19 cases dented hopes of a swift economic recovery.
“Investors are hedging their exposure to riskier assets simply because there's a growing and widening belief that any recovery is unlikely to be V-shaped,” said Michael Hewson, chief market analyst at CMC Markets UK.
“Markets generally tend to operate through a prism of optimism and that optimism is being tested at the moment and gold is benefiting from that.”
The United States has exceeded three million infections, while cases also grew worldwide.
Adding to the economic worries, US Fed officials expressed concern that the surge threatened to pinch consumer spending and job gains.
The European Commission also forecast the eurozone would drop deeper into recession this year.
However, in the medium to longer-term, an improvement in the economic backdrop could weigh on gold, Julius Baer analyst Carsten Menke said in a note, pointing out that safe-haven demand has been the strongest in countries hit the hardest, such as the US and the UK.
Mirroring appeal for the metal, prices of which have rallied over 18 per cent so far this year, gold-backed exchange traded funds added 104 ton of bullion worth $5.6 billion in June, the World Gold Council said on Tuesday.
“The health, financial and economic uncertainties generated by the Covid-19 pandemic and its aftermath are likely to continue to support gold’s rally well into 2021, but at a reduced level,” HSBC analysts said in a note.
-- With Reuters