Gold charges toward $2,000, stocks climb on stimulus hopes
NEW YORK (Reuters) – Gold surged to a record high on Tuesday after Democrats and the White House appeared closer to agreement on new stimulus to help the coronavirus-hit economy and a broad swath of Wall Street edged up as investors awaited more aid from Washington.
Oil prices also rose on the prospect of a new package but Treasury yields slid to their lowest since March on safe-haven demand and concerns about the ultimate cost of a stimulus bill.
Gold surged to the psychologically important level of $2,000 an ounce after the U.S. Senate’s top Democrat said a new round of coronavirus relief was moving in the right direction, though the two sides remain far apart.
Spot gold prices XAU= rose $18.5543, or 0.94%, to $1,995.25 an ounce. Earlier, spot gold was bid at $2,000.11 an ounce.
Bullion has soared more than 30% so far this year, supported by lower interest rates and safe-haven buying on concerns Federal Reserve policy and government stimulus are debasing the currency.
The bond market, which is at loggerheads with the equity markets over stimulus and its role in the economy, is skeptical about the prospects of a rebound in economic growth in the third quarter.
“There is a concern about how much the stimulus package will help the economy, and its cost over time,” said Kevin Giddis, chief fixed income strategist at Raymond James.
The 10-year U.S. Treasury notes US10YT=RR slid 3.8 basis points to yield 0.5249% after earlier trading as low as 0.513%. MSCI’s benchmark for global equity markets .MIWD00000PUS rose 0.47% after earlier hitting a five-month high, less than 4% from its all-time peak in February. The index was lifted overnight when stocks rallied in Asia on relatively strong manufacturing data from around the world reported on Monday.
On Wall Street, the Dow Jones Industrial Average .DJI rose 0.36%, the S&P 500 .SPX gained 0.09% and the Nasdaq Composite .IXIC dropped 0.09%.
Wall Street shrugged off new upbeat data after a report showed new orders for U.S.-made goods increased more than expected in June, suggesting the manufacturing sector was beginning to claw its way out of the pandemic’s deep pit.
The Commerce Department said factory orders rose 6.2%, boosted by a surge in demand for motor vehicles. Despite the second straight monthly gain, orders remained well below their level in February before lockdowns sapped demand.
Shares in Europe slid. The broad pan-regional FTSEurofirst 300 index .FTEU3 closed down 0.10% at 1,412.42 after a strong rally on manufacturing data on Monday.
Disappointing results from Diageo Plc (DGE.L), the world’s largest spirits maker, and German drugs and pesticides group Bayer (BAYGn.DE), took the shine off growth-linked cyclical stocks.
BP (BP.L) cut its dividend for the first time in a decade after a record $6.7 billion second-quarter loss, when the pandemic hammered fuel demand. Its shares rose 6.5% after BP unveiled a plan to reduce its oil and gas output by 40% and boost investments in renewable energy.
Oil prices edged higher, with Brent on track for a five-month high, on hopes for more stimulus and signs America may be making progress on controlling the coronavirus spread.
Brent crude futures LCOc1 rose $0.29 to $44.44 a barrel. U.S. crude futures CLc1 gained $0.59 to $41.6 a barrel.
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