Stocks falter as safe haven gold climbs above $1,800
LONDON (July 8) Stock markets mostly extended losses Wednesday, with concerns about fresh spikes in coronavirus infections helping haven investment gold to reach above $1,800 an ounce for the first time since 2011.
London's benchmark FTSE 100 stocks index was down 0.1 percent awaiting a UK budget announcement on plans to kickstart Britain's economy following devastation caused by the COVID-19 pandemic.
In early afternoon eurozone deals, Frankfurt's DAX 30 index lost 0.5 percent and the Paris CAC 40 shed 0.8 percent.
Tokyo closed down 0.8 percent but Shanghai jumped 1.7 percent.
Wall Street stocks tumbled Tuesday, with the Nasdaq pulling back from a record as the equity rally paused amid surging US coronavirus cases.
A string of positive indicators from China to the US in recent weeks -- as well hopes for a vaccine and the easing of lockdowns around the world -- added fuel to a global stock markets rally that has lifted equities out of their March depths.
But while investors are upbeat that the world economy will recover from an expected recession this year, the ongoing spread of coronavirus has seen indices drop over the past two days.
That helped gold climb to $1,804.31 an ounce Wednesday on the London Bullion Market, the highest level in 8.5 years, as recent dollar weakness also makes the metal priced in the US unit attractive to investors.
"It is little surprise that the original safe haven is continuing its rally," said Carlo Alberto De Casa, chief analyst at ActivTrades.
"Investors are still buying stocks but it seems they want to be covered in case of any market correction."
With gold seen as a good store of value, Markets.com analyst Neil Wilson said the metal was winning support also thanks to fears of high inflation caused by central bank stimulus to prop up the global economy.
"The gold bull thesis rests not only on the requirement for safe assets given the economic uncertainty, but also longer term on fears of a surge in inflation caused by the massive increase in the money supply," he said in a client note.
Adding to market unease were ongoing tensions between China, the US and several other nations over Beijing's imposition of a security law in Hong Kong.
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