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Thursday, October 29, 2020

Gold gains on bleak US data, but en route for 2% weekly fall

Spot gold climbed 0.4% to $1,686.71 per ounce by 0454 GMT, paring some losses from a near 2% drop on Thursday. US gold futures eased 0.1% to $1,692.70 per ounce.

By: Reuters | May 1, 2020 11:59:01 am
PRECIOUS - Gold falls on profit-booking, virus-led economic fears cap losses, Commodity currencies slip against the dollar and yen, 16.8 million US jobless claims since week ended March 21, gold prices news, bullion prices news, commodity market news, business news india, indian express business news Five hundred gram gold bars, produced by Swiss manufacturer Argor Hebaeus SA, sit in a storage tray in this arranged photograph at Aranypiac Kft in Budapest, Hungary, on Wednesday, July 20, 2016. (File photo, source: Akos Stiller/Bloomberg)

Gold rose on Friday as dismal data from the United States underscored the deep economic impact of the coronavirus, but moves by some countries to ease tough containment measures kept bullion on track for its worst week in a month and a half.

Spot gold climbed 0.4% to $1,686.71 per ounce by 0454 GMT, paring some losses from a near 2% drop on Thursday. US gold futures eased 0.1% to $1,692.70 per ounce.

“The main driver of rising gold prices is the weak labour market outcome in the United States. This suggests continued fiscal and monetary support, which is broadly supportive of gold,” said National Australia Bank economist John Sharma.

Millions more Americans filed claims for unemployment benefits last week, lifting the number of applications to 30.3 million since March 21, data showed, amid a record collapse in consumer spending in March.

The bleak data came despite elaborate stimulus measure from the US government and the Federal Reserve, which retained its benchmark interest rate at near zero.

The US House speaker said state and local governments could need close to $1 trillion in aid over several years to cope with the aftermath of the pandemic.

Bullion tends to benefit from widespread stimulus measures as it is often seen as a hedge against inflation and currency debasement.

Gold, however, was down about 2.4% for the week, its biggest drop since mid-March.

Expectations for easing in restrictions and optimism surrounding a potential COVID-19 treatment drug weighed on
bullion, analysts said.

“The virus is far from over, but the wave of positive news had taken some air out of gold’s wings,” said Edward Moya, a senior market analyst at broker OANDA.

Half of all US states forged ahead with their strategies for easing restrictions on restaurants, retail and other businesses in hopes of reviving the virus-stricken commerce.

UK Prime Minister Boris Johnson promised to set out a plan next week on how Britain might start gradually returning to normal life.

However, uncertainties prevailed due to lack of clarity on the timing around potential lifting of lockdown measures and whether it would result in a secondary outbreak, said Michael McCarthy, chief strategist at CMC Markets.

Palladium slipped 0.1% to $1,958.99 per ounce, on track to post its fifth straight weekly decline.

Platinum dipped 0.5% to $768.62 per ounce. Silver fell 0.6% to $14.93, en route for its worst week in more
than a month.

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