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Thursday, June 04, 2020

Gold gains as grim data stirs doubts about economic recovery

Spot gold gained 0.2% to $1,688.24 per ounce by 0549 GMT. US gold futures rose 0.2% to $1,691.80 per ounce.

By: Reuters | Published: May 7, 2020 1:10:37 pm
Gold scales 7-year high on rising economic worries, Fed stimulus, SPDR Gold holdings rise to highest since June 2013, global gold price news tuesday, business news india, commodity market news, indian express business news One kilogramm fine gold bar are pictured in the Pro Aurum KG in Munich, Germany. (Image source: Bloomberg)

Gold rose on Thursday as bleak economic data raised doubts about a recovery in the coronavirus-hit global economy even though some countries started easing lockdown measures.

Spot gold gained 0.2% to $1,688.24 per ounce by 0549 GMT. US gold futures rose 0.2% to $1,691.80 per ounce.

“There is a lot of uncertainty, markets are still trying to gauge what will happen after we come out of lockdown,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.

Weak economic growth in most countries is also supporting the dollar, putting a lid on bullion’s gains, he added.

The dollar touched a more than one-week high against a basket of major currencies.

Gold declined more than 1% in the previous session on a firmer dollar and as some bullion refineries restarted production, easing concerns over global supply.

Highlighting the deepening impact of the coronavirus pandemic, US private employers laid off a record 20.236 million workers in April as the outbreak ravaged the world’s top economy.

The euro zone economy is set to contract by a record 7.7% this year because of the pandemic, the European Commission forecast on Wednesday.

Investors now await the US weekly initial jobless claims data due later in the day for further direction, while keeping a close watch on developments surrounding US-China relations after President Donald Trump threatened new tariffs on Beijing.

“Gold in the short-term could struggle, but the macro driver continues to point to a rally to record high territory (in dollar terms) later this year,” Edward Moya, a senior market analyst at broker OANDA, said in a note.

Economic activity is expected to have a much slower rebound this quarter and that should continue to support expectations that global monetary and fiscal stimulus efforts will only intensify, Moya added.

Central banks around the world have slashed interest rates over the past few months and unveiled unprecedented amounts of stimulus to help soften the blow to the world economy from the pandemic.

Gold, a safe investment during times of political and financial uncertainty, tends to benefit from widespread stimulus measures because it is widely viewed as a hedge against inflation and currency debasement.

Elsewhere, palladium gained 1.3% to $1,821.54 per ounce, platinum climbed 1.3% to $758.20 and silver edged up 0.3% to $14.97.

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