Gold Prices Top $1,800 For the First Time Since 2011 As Bullion Rally Attracts Record ETF Inflows

Gold prices are set to test a nine-year peak in the coming weeks as investors plow a record amount of cash into bullion-backed ETFs as governments and central banks pledge trillions in coronavirus-recovery spending.

Gold prices jumped to a fresh eight year high Wednesday, topping the $1,800 mark for the first time since 2011, as investors continue to favor defensive assets in the wake of trillions in government and central bank spending aimed at softening the impact of the global coronavirus pandemic.

Spot gold prices passed the $1,800 mark -- trading at $1,800.11 -- in early European dealing as the U.S. dollar struggled to hold gains against a basket of its global peers. The move took bullion to the highest levels since November 2011 and pegged its year-to-date gain at 18.66%. Comex gold futures for August delivery, meanwhile, rose 0.25% to $1,814.60 per ounce.

Data from the World Gold Council, published late Tuesday, added further support to the recent breakthrough, with figures showing a flows into gold-backed ETFs rising for the seventh consecutive month in June.

Gold-backed ETFs, in fact, have attracted some 734 million tons -- or $39.5 billion -- in new inflows over the first six months of this year, a move that takes the overall total to 3,621 tons and surpasses the annual record inflow of 646 tons that was set in 2009. 

The SPDR Gold Trust ETF  (GLD) - Get Report, the world's largest, was marked 0.01% higher in pre market trading Wednesday at $169.11 each, a move that would take its three-month gain to around 9.35%.

Hedge funds are also holding on to recent gold investments, according to the latest Commitment of Traders Report from the Commodity Futures Trading Commission, which showed gold holdings rising 2% to a nine-week high - although still well below their February peak.  

Central banks around the world had been buying nearly $2.4 billion in financial assets every hour for the two months ending in May, according to Bank of America data, taking the overall total to around $4 trillion.

Late Tuesday, Federal Reserve Vice Chairman Richard Clarida told CNN International that while "we have a lot of accommodation in place" ... 'there's more that we can do, there's more that we will do" to support the domestic recovery.  

The U.S. dollar index, which benchmark's the greenback against a basket of its global peers, has fallen 5.8% since mid-March, when the Federal Reserve first said it will buy an unlimited amount of government debt, as well as corporate and municipal bonds, in the biggest expansion of its balance sheet in history.