Gold Continues to Rise, Set to Test $1,700 Resistance

By CanadianMiningReport.com Staff Writer / March 02, 2020 / Article Link

Mounting fears about the coronavirus becoming a global pandemic are continuing to fuel investors’ interest in gold as a safe-haven asset to counter the uncertainty. This, in turn, sent gold prices soaring to seven-year highs at the start of the week.

In such a risk-off climate, gold prices surged up 14 out of the past 16 days through February 25, setting itself up to test resistance at $1,700 an ounce, a level unseen since December 2012. As a result, Canada's main stock index TSX edged higher on Wednesday, supported by spot gold. Spot gold rose 0.5% to $1,644.30 per ounce by 1217 GMT.

Unfortunately, a trading halt occurring on TSX, TSXV & TSX Alpha in the early morning of Friday, the 28th, due to a technical issue saw the TSX (^GSPTSE) dropping 324.48 points or 1.9% to 16,717.44. As of the time of reporting, the market will remain in a Pre-Open state until further notice, new orders can’t be entered and open orders can’t be changed or cancelled.

Prior to the halt, the largest percentage gainers on the TSX were Alacer Gold Corp, which jumped 2.1%, and Centerra Gold, which rose 1.5% as gold prices rose on sustained safe-haven demand. Gold stocks of the Canadian junior gold miners are benefiting from the demand for spot gold. The bullion touched a high of $1,688.6 on Feb 24, the highest since January 2013. This marks a gain of 10% for gold so far in 2020.

This continues an upward trend from 2019, wherein gold gained about 19% — its strongest annual increase since 2010. Uncertainty in the U.S-China trade front, geopolitical concerns, the Brexit consequences, a weak manufacturing sector and apprehensions over the global economic outlook have all contributed to investors’ appetite for the yellow metal. Three rate cuts by the Fed only added to the rally.

Overall, the Gold Mining industry rallied 46.4% over the past year with many of Canada’s gold miners receiving an upgraded rating for their gold stocks. Kirkland Lake Gold Ltd. KL: This Toronto, Canada-based company currently is a Strong Buy.

At the current price of around $1,637 USD, gold has a little over 16 percent to go before it reaches its all-time high from September 2011.