Gold and silver prices peaked on concern that a second 'Covid-19' erupted

Gold prices peaked in nearly 8 years, silver peaked in two months on fears of gloomy economic data and the possibility of a second Covid-19 outbreak.

Each ounce of gold delivered in June rose to 1,756.3 USD - the highest level since the end of 2012. Meanwhile, the spot gold price also approached the threshold of 1,750 USD, up 2% in the week.

Silver also had recent spikes, reaching more than $ 16.62 per ounce, up nearly 40% from the bottom in early March and approaching the highest price zone in more than two months.

The two precious metals rebounded sharply after US Federal Reserve Chairman Jerome Powell warned that a pandemic would cause heavy economic losses. The fear of investors is increasing due to the gloomy data on retail activities, unemployment and the US-China tensions reoccurring due to the pandemic problem. US President Donald Trump even said he could sever ties with Beijing.

The rally also resonated with fears that a "second wave of Covid-19" could occur. Countries that have successfully controlled the pandemic, including South Korea and China, are facing an increasing number of infections. In the US, the number of deaths from the pandemic in Texas soared to the highest level since the outbreak. This is creating mixed opinions about reopening the economy.

Bullion and coins in Pro Aurum's safe deposit room in Munich, Germany. Photo: Reuters.

"These just add to the evidence that shows the reality of a gloomy economic picture," said Phil Streible, market strategist at Blue Line Futures. At the same time, he said, people are rushing to buy gold because the weak state of the economy may cause interest rates to continue to fall.

Rhona O'Connell, head of market analysis at INTL FCStone, admits that the market is full of fears, from economic developments to the complexity of pandemics. "Gold prices are reaching a 'breakthrough' point when fears in the market converge at the same time," he said.

In addition, precious metals also benefit from large economic stimulus packages, because gold is considered a tool to prevent inflation risks.

According to analysts at Commerzbank, in the chaotic and bewildered situation, it is not surprising that gold ETFs are constantly buying in. If speculators also jumped in, gold could quickly climb to $ 1,800.

"Although weak physical demand and the buying power of central banks are slowing down, there is little reason to sell gold during periods of unprecedented stimulus by countries and the relationship between economic powerhouses. ", Tai Wong - Director of Precious Metals Trading at BMO commented.

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