Gold sets sights on $1,900/oz mark as haven flows gather steam

Gold resumed its march toward $1,900 on Friday as an escalation in the US-China spat added further safe-haven fuel to a rally to a nine-year peak driven by fears over the economic hit from the coronavirus pandemic.

Silver, meanwhile, was en route to its best week since 1987.

Spot gold was up 0.3pc at $1,892.32 per ounce by 1002 GMT, having hit its highest since September 2011 at $1,897.91 on Thursday.

US gold futures rose 0.1pc to $1,890.90.

"It's the indirect effects of the virus to the economy and deep doubts whether we're going to see a V-shaped recovery which is supporting gold," said independent analyst Ross Norman, adding "fear factor around the US-Chinese spat will add fuel to the fire but won't sustain".

"If the economy doesn't show quality signs of improving you could see further flows into gold and it would just stride majestically over $1,922 and continue higher up towards $2,000."

Non-yielding gold has surged 24pc this year, underpinned by low interest rates and stimulus from central banks to revive their economies, which benefits bullion since it's a perceived hedge against inflation and currency debasement.

In the latest flare-up, China ordered the United States to shut its Chengdu consulate in retaliation for the closure of its consulate in Texas, dampening risk assets.

Further helping gold, the dollar index held near a two-year low, and was on track for its biggest weekly decline since early June.

However, the rise in gold and silver has happened "very quickly - possibly too quickly," Commerzbank analysts said in a note, adding this "entails the risk of a setback, especially as gold and silver are being driven almost exclusively by extremely strong investment demand".

Silver, fell 0.5pc to $22.61 per ounce, but was still up over 17pc for the week, helped by hopes for a revival in industrial activity.

Platinum rose 0.7pc to $911.23 and palladium climbed 1.5pc to $2,157.40.