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Gold gains as weak US jobs data, virus worries dim recovery hopes

Spot gold rose 0.3% to $1,811.31 per ounce by 0324 GMT. U.S. gold futures were up 0.2% to $1,808.70

Topics
Gold Prices | US job data

Reuters 

Photo: Reuters
Photo: Reuters

By Nakul Iyer

(Reuters) - rose on Thursday as grim U.S. jobs data and worries over surging COVID-19 cases worldwide cast doubts over a quick economic recovery and bolstered the metal's safe-haven appeal.

Spot gold rose 0.3% to $1,811.31 per ounce by 0324 GMT. U.S. gold futures were up 0.2% to $1,808.70.

U.S weekly jobless claims rose for the second straight week, data on Wednesday showed, undermining the recovery in the labour market amid rising coronavirus cases and business restrictions.

"The (jobs) data clearly highlighted the divergence between positivity driven by the vaccine and the near-term COVID-19 issue," said Stephen Innes, chief global market strategist at financial services firm Axi, noting that the report also boosted the chances for further stimulus.

"The vaccine narrative has watered down gold's appeal immensely and it will continue too until we finally move from a deflationary world into an inflationary world," Innes added.

The United States recorded 2.3 million new coronavirus infections in the past two weeks, while soaring cases prompted a lockdown extension in Germany.

U.S. Federal Reserve policymakers discussed how the central bank's asset purchases could be adjusted to provide more support to markets, with some Federal Open Market Committee participants expecting the Fed to eventually lengthen the maturity of the bonds purchased.

"With the widespread distribution of a coronavirus vaccine unlikely before H2 2021, central banks are likely to remain accommodative," ANZ analysts said in a note.

The bank kept its 12-month target of $2,100 per ounce for gold, saying accommodative central bank policy and dollar weakness meant gold was well supported with a low likelihood of a bear market.

Gold is seen as a hedge against inflation likely to result from large stimulus.

Silver rose 0.5% to $23.40 an ounce. Platinum gained 0.4% to $966.86 and palladium was 1.2% higher at $2,356.77.

 

(Reporting by Nakul Iyer in Bengaluru; Editing by Ramakrishnan M.)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Thu, November 26 2020. 09:32 IST
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