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LGT Navigator: Gold passes 2000 dollar mark for the first time

August 5, 2020

The precious metal has gained more than 30% in value since the beginning of the year. The rally on US stock markets continued on Tuesday. Argentina's government averts state bankruptcy and agrees with its creditors on a debt restructuring.

Earnings season remains in focus of stock markets

On Tuesday, the gold price for the first time ever exceeded the USD 2000 an ounce mark. Since the beginning of the year, the precious metal has gained more than 30% in value, making it one of the best-performing assets. In a market environment characterized by ultra-low interest rates, enormous liquidity injections from central banks and governments, as well as uncertainty about the impact of the corona pandemic, investors are seeking protection in gold. In July, for instance, USD 7.4bn net flowed into ETFs backed by physical gold, reports the industry association World Gold Council. This is after a record USD 40bn was invested in these products in the first half of the year.

US stock markets close stronger again

The rally on US stock markets continued on Tuesday, although momentum eased somewhat compared to the previous day. Good economic data provided support: American industrial companies received more orders in June than expected. As a result, the technology indices again recorded new highs and the Nasdaq 100 advanced 0.38% to 11096.54 points. The Asian stock markets are showing a mixed picture today. The Shanghai Composite and the Hang Seng Index are slightly up, while the Nikkei in Tokyo loses -0.4%.

Argentina averts bankruptcy

Shortly before the deadline expired on 4 August, Argentina agreed with its creditors on a restructuring of the public debt. This involves government bonds with a volume of USD 65bn, whose interest payments were already suspended in May. The Argentine government then asked the creditors to waive part of the claims – since then, the parties have been negotiating a debt restructuring. Argentina's economy was already in recession before the corona crisis, and in recent months, the pandemic has exacerbated the economic misery. With the agreement, Argentina's government has averted another national bankruptcy, which would have been the ninth in the history of the third largest Latin American economy. Now debtors and creditors have until the end of August to determine the details of the restructuring.

Number of unfilled jobs declines in Germany

The number of job openings in Germany has been significantly reduced in the wake of the corona crisis. Almost half a million fewer jobs were to be filled in the second quarter than in the prior-year quarter. This corresponds to a decline of 36%. One of the reasons for this is the introduction of short-time working, which numerous companies are using to safeguard jobs. A hiring freeze applies during this phase. In the same period, unemployment has risen, so the ratio of job seekers to vacancies has almost doubled, compared to the same quarter of the previous year (3.1 vs. 1.6)

Fewer unemployed in Spain

In Spain, unemployment fell in July for the first time since February. In comparison with the previous month, the unemployment rate fell by 2.3%. Nevertheless, there are still nearly 3.8 million people looking for work, over 760000 more than in July 2019. According to the Statistics Office, the employment situation has improved in all sectors except for agriculture, after the government lifted the lockdown.

Economic Indicators August 5

MEZ Country Indicator Last
03:45 CN Caixin Purchasing Managers' Index Services (July) 58.4
10:00 CH Kof economic survey (July)
11:00 EZ Purchasing Managers' Index Services (July) 55.1
14:30 US Trade balance  USD -54.6 bn
16:00 US ISM Purchasing Managers' Index Services (July) 57.1

Earnings Calendar August 5

Country Corporate Period
NL Ahold Delhaize Q2
GE BMW Q2
GE Allianz Q2

 

 

 

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, +41 44 250 83 48, E-Mail: lgt.navigator@lgt.com
Source: LGT Bank (Switzerland) Ltd.

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US employment growth remains dynamic at the beginning of the year