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Gold surged to its highest in nearly eight years on Wednesday as rising coronavirus cases globally dented hopes of a rapid economic recovery and pushed investors towards safe haven assets.

Spot gold prices climbed 0.6% to $1,777.53 per ounce by 0957 GMT, having earlier hit their highest since October 2012 at $1,779.06.

U.S. gold futures gained 0.7% to $1,794.60.

“Everybody is worried about a second wave of the coronavirus not only in the U.S., but in Latin America, Brazil and Russia, so that’s supporting the rally,” said Jigar Trivedi, commodities analyst at Mumbai broker Anand Rathi Shares.

“People are expecting stimulus packages from central banks and higher the stimulus, better the prospects for gold.”

The United States had a 25% increase in new cases of COVID-19 in the week ended June 21 compared with the previous seven days, while the death toll in Latin America has surpassed 100,000, a Reuters analysis found.

The European Union is prepared to bar travellers from the United States, putting the country in the same category as Brazil and Russia, the New York Times said.

The surge in coronavirus cases also weighed on global stock markets.

Global central banks have bumped up stimulus measures and kept interest rates low to ease the economic blow from the pandemic, driving a more than 16% rise in gold this year, as it is widely seen as a hedge against inflation and currency debasement.

Indicative of investor sentiment, holdings in SPDR Gold Trust , rose 0.28% to 1,169.25 tonnes on Tuesday, its highest level since April 2013.

Julius Baer analyst Carsten Menke said: “We stick to our view that a short and sharp recession is fully priced into gold around $1,700 per ounce and that a further deterioration of the economic environment is needed to lastingly lift prices.”

He also said that short-term risks were now skewed to the upside as technical traders and trend followers were being lured back into the market.

Elsewhere, palladium rose 1% to $1,942.75 per ounce, platinum was up 0.1% at $830.25.

Silver was little changed at $17.96.



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