By Bryan Wong
Investing.com - Gold was up on Friday morning in Asia, reaching another record high as U.S. treasury yields remain low and monetary policy accommodative.
Gold futures rose 0.44% to $2,067.70 by 10:21 PM ET (3:21 AM GMT).
The deterioration of the global economy has pushed treasury yields down to their lowest levels in five months, reducing the opportunity cost of holding non-interest bearing gold.
The greenback, although up today, is also heading for a seventh consecutive weekly decline, making gold less expensive for holders of other currencies.
Meanwhile, the U.S. Congress has yet to conclude negotiations on another COVID-19 aid package even as President Donald Trump said he would take executive action if the standstill persists. The last package expired on July 31 and without some kind of help the U.S. economic recovery could be put in doubt, leading to further drops in interest rates.
“If economic conditions continue to deteriorate and the Fed is forced to seriously consider negative policy rates, the read-across could be negative for equities, especially via the financials channel,” SocGen strategists told Bloomberg.
“It would be reasonable to expect dips in gold to be bought at the same time by investors in an increasingly uncertain environment.”