Gold firms on economic worries, stimulus hopes

20 September, 2020 12:00 AM printer

BENGALURU: Gold prices rose on Friday as gloomy US jobs data cast a shadow over the economic outlook, and major central banks pledged to roll out further stimulus if required to revive their coronavirus-battered economies.

Spot gold climbed 0.5 per cent to US$1,951.32 per ounce by 3.48am GMT, having fallen to a one-week low in the previous session. It has gained 0.5 per cent so far this week, report agencies.

US gold futures were 0.5 per cent higher at US$1,959.

“Virus concerns are still weighing down on economic recovery and when you look at a lot of economic data it looks like it’s moderating but there is still tremendous damage,” said Edward Moya, a senior market analyst at broker Oanda. “There’s still going to be need for more support.”

The weekly jobless claims report from the US Labor Department showed nearly 30 million people were on unemployment benefits at the end of August, laying bare the continuing economic and human devastation from the Covid-19 pandemic.

The Federal Reserve on Wednesday vowed to keep interest rates near zero for a long time, noting that the pandemic “will continue to weigh on economic activity” in the near term.

On Thursday, the Bank of England said it was considering negative interest rates amid rising Covid-19 cases, higher unemployment and a possible new Brexit shock, while the Bank of Japan signalled readiness to ramp up stimulus.

“Underlying factors remain supportive for gold, as we expect the US dollar to weaken while bond yields will remain low as central banks keep monetary policies accommodative,” Fitch Solutions said in a note.

Near-zero interest rates globally and demand for a hedge against perceived inflation have helped gold gain nearly 29 per cent so far this year.

The dollar index steadied after falling overnight.