· Gold rose on Thursday as bleak economic data raised doubts about a recovery in the coronavirus-hit global economy even though some countries started easing lockdown measures.
Spot gold gained 0.2% to $1,688.24 per ounce by 0549 GMT. U.S. gold futures rose 0.2% to $1,691.80 per ounce.
· "There is a lot of uncertainty, markets are still trying to gauge what will happen after we come out of lockdown," said Stephen Innes, chief market strategist at financial services firm AxiCorp.
Weak economic growth in most countries is also supporting the dollar, putting a lid on bullion's gains, he added.
· The dollar touched a more than one-week high against a basket of major currencies.
· Gold declined more than 1% in the previous session on a firmer dollar and as some bullion refineries restarted production, easing concerns over global supply.
· Highlighting the deepening impact of the coronavirus pandemic, U.S. private employers laid off a record 20.236 million workers in April as the outbreak ravaged the world's top economy.
· The euro zone economy is set to contract by a record 7.7% this year because of the pandemic, the European Commission forecast on Wednesday.
· Investors now await the U.S. weekly initial jobless claims data due later in the day for further direction, while keeping a close watch on developments surrounding U.S.-China relations after President Donald Trump threatened new tariffs on Beijing.
· "Gold in the short-term could struggle, but the macro driver continues to point to a rally to record high territory (in dollar terms) later this year," Edward Moya, a senior market analyst at broker OANDA, said in a note.
Economic activity is expected to have a much slower rebound this quarter and that should continue to support expectations that global monetary and fiscal stimulus efforts will only intensify, Moya added.
· Central banks around the world have slashed interest rates over the past few months and unveiled unprecedented amounts of stimulus to help soften the blow to the world economy from the pandemic.
· Gold, a safe investment during times of political and financial uncertainty, tends to benefit from widespread stimulus measures because it is widely viewed as a hedge against inflation and currency debasement.
· Elsewhere, palladium gained 1.3% to $1,821.54 per ounce, platinum climbed 1.3% to $758.20 and silver edged up 0.3% to $14.97.
· Gold Price Analysis: 10/21-day SMA guards pullback around $1,700
Having bounced off four-day low, Gold prices print 0.30% gains on a day while taking the bids to $1,690.44 on early Thursday.
Even so, the yellow metal remains below a confluence of 10 and 21-day SMA, around $1,702/03 now.
Also likely to challenge the buyers is the falling trend line from April 14, currently near $1,725, a break of which enables buyers to aim for April month top near $1,748.
Meanwhile, a joint of 23.6% Fibonacci retracement of March-April upside and monthly ascending trend line, close to $1,677, acts as the near-term key support.
Should there be a clear downside past-$1,677, April 08 low near $1,641 could lure the sellers.
· Gold prices fell as a sell of US treasuries weighed on investor appetite for the precious metal, strategists at ANZ Bank inform.
“The US Treasury said it is increasing the amount of debt it plans to issues in quarterly auctions. This saw investors sell treasuries, which pushed yields higher.”
· Central-bank gold selling 'limited' but holdings could be used as collateral: Standard Chartered
It is unlikely central banks will start selling their gold holdings as many economies across the globe face a recession as they begin to reopen, according to Standard Chartered.
“Central-bank buying has slowed; we expect them to remain net buyers, despite isolated selling,” Standard Chartered precious-metals analyst Suki Cooper wrote in a note on Wednesday. “Central-bank buying has slowed since late last year and we expect it to fall this year to 360t, but remain elevated compared to historical levels.”
What might happen going forward is some central banks using part of the gold holdings as collateral, Cooper noted. “Central banks have not necessarily sold their gold holdings during periods of distress, partially as the USD value of total gold reserves has not been high enough, but it could be used as collateral.”
Reference: Reuters, FX Street, Daily FX
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