Gold headed for the biggest quarterly advance since 2016 amid a surge in demand for haven assets due to the coronavirus outbreak, which shows no signs of abating.

Bullion has been rising due to a resurgence in virus infections, with new hot spots emerging and the World Health Organization warning that the worst of the pandemic is still to come because of a lack of global solidarity. More U.S. areas took steps to scale back reopenings, while Australia’s Victoria is imposing a four-week lockdown in some parts of the metropolis of Melbourne in an attempt to contain a spike in cases.

There’s also increased geopolitical tension after China’s top legislative body approved a landmark national security law for Hong Kong, a sweeping attempt to quell dissent that risks U.S. retaliation and the city’s appeal as a financial hub. Meanwhile, the Trump administration earlier said it was suspending regulations allowing special treatment to Hong Kong over things including export license exceptions.

The precious metal has rallied 17 per cent this year as the health crisis prompted a wave of stimulus from governments and central banks as they tried to minimize the damage to the global economy. Investors also continue to pile into gold-backed exchange-traded funds, with holdings at a record.

“Low interest rates, monetary policies and the coronavirus are all at play,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. “The US$1,800 level is a psychological hurdle. At current prices we see gold pushing the boundaries of what our model implies as fair value, so we may need a larger collapse in Treasury rates to push gold past the US$1,800 level.”

Spot gold was little changed at US$1,770.36 an ounce at 12:07 p.m. in London as the dollar climbed. Prices are up 12 per cent in the three months ending June 30, and are set to cap seven straight quarters of gains, the longest such stretch since 2011.

The US$1,800 mark “is not far away so it can happen quickly,” said Commerzbank AG analyst Carsten Fritsch. “But further beyond will be more difficult.”

Investors will be closely watching comments from Federal Reserve Chair Jerome Powell due later Tuesday. In remarks prepared for testimony before the House Financial Services Committee, Powell stressed the importance of keeping the coronavirus contagion contained as the U.S. economy bounces back from its deepest contraction in decades.