Gold extended its superhot rally with the futures reaching $2,000 an ounce for the first time ever on Tuesday, as investors continue to take refuge in safe-haven assets on fears of a slowing global economy and a near-term market tumble. The gold price had leaped as high as $1,944.55 on Monday and analysts believe that the rally is going to continue further.

A number of factors are aiding gold prices over the past few months, which has further been getting a push lately due to worsening geopolitical tensions between the United States and China. Also, aggressive money printing policy adopted by different central banks since the Covid-19 outbreak is raising fears among investors of rampant inflation, which got further aggravated as the Senate unveiled another round of coronavirus stimulus package on Monday.

Yellow Metal on a Rally

Gold Bars
Gold backed exchange-traded funds this year has already topped the record set in 2009 Pixabay

Gold extended its record-breaking rally on Tuesday with the precious metal crossing $2,000 for the first time ever, as futures jumped more than 2 percent to a record high. Gold futures advanced 2.3 percent and traded at $1,997 at 9.27 am in Singapore. Spot gold was at $1,973.44.

A day earlier, the yellow metal hit an-all time high, surpassing the previous peak attained in September 2011. Not only gold, silver too hit a seven-year-high as the gauge of dollar extended its fall to the lowest level in almost two years. Spot silver rose more than 6 percent to $26.1236 an ounce, the highest since April 2013.

The latest surge comes amid a weakening dollar that has made several investors skeptical of rampant inflation. This has seen a surge in investor demand for safe-haven assets, which has been fueling gains for precious metals like gold and silver. Gold backed exchange-traded funds this year has already topped the record set in 2009, while silver holdings are nearing an all-time high.

Rally to Continue

US dollar
The massive liquidity injections by the Fed has been putting pressure on the U.S. dollar and giving a boost to dollar-priced commodity prices (Representational photo) IANS

People have been flocking to gold lately as they are finding the yellow metal the best place to park their money during this time of market uncertainty. However, a lot of other factors too are fueling the price of precious metals. Besides the uncertainty over the global economy's strength, another factor that has been playing a major role behind gold's rally is the extra-loose monetary policies across the globe.

The Fed has been acting super-dovish since March and has cut rates to near-zero and has also been buying highly-rated corporate debt as well as fallen angles. The low interest rates have been increasing the appeal of the yellow metal as they reduce the opportunity cost.

Also, the massive liquidity injections by the Fed has been putting pressure on the U.S. dollar and giving a boost to dollar-priced commodity prices lately. Analysts believe that the rally is going to continue well into the fall as Fed announces another round of stimulus, which will further lower the dollar's strength.