Gold edges higher as gloomy U.S. jobs data dents dollar
· Gold prices edged up on Thursday, recovering from initial losses, after data showed U.S. jobless claims surged to a record high due to the coronavirus pandemic.
· The data put further downward pressure on the dollar, lifting the appeal of gold which is seen as a safe haven.
· Spot gold was up 0.3% at $1,618.60 per ounce by 1235 GMT.
· "Short term, initially gold may rise when stocks fall because it's a safe haven asset. However if selling in stocks continue, funds may see margin calls and need to sell gold for cash," said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS.
· "Long term, with all the liquidity central banks are injecting into the system, there will be massive purchasing power destruction in the future, which will be good for gold."
· Data showed the number of Americans filing claims for unemployment benefits shot to an all-time high of more than 3 million last week as strict measures to contain the coronavirus pandemic hit economic activity.
· The U.S. Senate on Wednesday overwhelmingly backed a $2 trillion bill aimed at helping unemployed workers and industries hurt by the coronavirus, but that did little to prop up risk sentiment.
· This came after the U.S. Federal Reserve said on Monday it would buy bonds in unlimited numbers and backstop direct loans to companies.
· "We see real interest rates remaining negative for a long time, keeping the non-yielding gold investments attractive... Any price setback will be an opportunity to buy gold," said Soni Kumari, commodity strategist at ANZ.
· Gold market participants, meanwhile, remained concerned about a supply squeeze in the market, following a sharp divergence in London and New York prices as the coronavirus closed precious metals refineries.
· U.S. exchange operator CME Group on Tuesday announced a new gold futures contract to combat price volatility caused by the shutdown of gold supply routes, but traders and bankers said it would not immediately calm markets.
· U.S. gold futures rose 1% to $1,649.40 per ounce, and held above the London spot contract.
· Elsewhere, palladium dropped 2.3% to $2,264.53 per ounce, having registered its largest daily gain since 1997 on Wednesday as a lockdown in major producer South Africa exacerbated supply woes.
· "Palladium is still not on very firm ground as the metal is more sensitive to economic meltdown," ANZ's Kumari said.
· Platinum slipped 2.1% to $722.31 an ounce, while silver shed 0.3% to $14.39.
Reference: CNBC
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