COMEX Gold Holds Just Above $1800 Per Ounce

Published on Dec 20, 2021 11:24

COMEX Gold futures raced higher from two month low last week as worries over Covid-19 stayed in place. Covid-19 infections and hospitalizations are rising once again, prompting a new wave of cancellations and disruptions as the country prepares for another pandemic holiday season. With the US averaging around 120000 new Covid-19 cases each day around 40% higher than a month ago, per Johns Hopkins University data. Gold broke above $1800 per ounce mark and hit around two week high following the spurt. The metal currently trades at $1802 per ounce, down marginally on the day.

Meanwhile, the World Gold Council (WGC) has noted that global portfolio composition continues to shift with larger allocations to alternatives. Many of these alternative investments have previously helped portfolio performance but are less liquid than traditional investments. The hunt for yield in a low-rate environment has also encouraged riskier fixed income investments. WGC noted that increased alternative and lower quality fixed income exposure could prompt a more volatile and less liquid portfolio. The shift to risker and less liquid assets strengthens the case for an allocation to gold, given its unique combination as a highly liquid diversifier, that can reduce portfolio volatility.