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Gold gains as gloomy US economic outlook dents dollar

21 Aug 2020

Picture used for illustrative purpose. File

Gold prices rose on Friday after bleak U.S. jobless claims data reinforced fears of a slower recovery from the coronavirus-induced economic crisis, denting the dollar and U.S. Treasury yields.

Spot gold was up 0.2% at $1,947.04 per ounce by 0655 GMT. Gold is up 0.2% so far this week, having shed 4.5% in the week to Aug. 14, its worst in five months. US gold futures rose 0.4% to $1,954.40.

"A deterioration in US labour market data, falling bond yields and continued geopolitical tensions continue to support gold," said National Australia Bank economist John Sharma.

"We see gold trading between $1,920 and $1,980 in the near term," he said, adding that factors such as rising risk sentiment and progress on the coronavirus vaccine front could dent demand.

A technology stocks-fuelled rally on Wall Street drove Asian markets higher on Friday, limiting gold's advance.

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Data on Thursday showed the number of Americans filing a new claim for unemployment benefits rose unexpectedly back above the 1 million mark last week, a setback for a struggling U.S. job market crippled by the coronavirus pandemic.

This sent the dollar index and benchmark 10-year Treasury yields lower, making gold an attractive investment for holders of other currencies.

Adding to doubts over a swift US economic rebound, Federal Reserve officials on Wednesday warned that a recovery faced a highly uncertain path, helping gold recover from a more than 3% slump earlier this week.

"Despite the rebound in prices, precious metals do have short-term downside risks that would continue to affect prices," Phillip Futures analysts said in a note.

Meanwhile, the Trump administration declined to acknowledge any plans to meet with China over the Phase 1 trade deal.

Elsewhere, silver was steady at $27.22 per ounce and was poised for a weekly rise of about 3% Platinum climbed 0.4% to $921.16, while palladium fell 0.4% to $2,171.99.

Reuters