· Gold gains after biggest daily decline in a month
· Gold prices rose on Thursday after an equity rally fueled by signs of an economic recovery from mandated shutdowns sparked the biggest daily fall since April 30 in the previous session.
Spot gold climbed 0.4% to $1,703.95 per ounce by 0407 GMT after a 1.7% drop on Wednesday. U.S. gold futures inched up 0.1% to $1,705.70.
· The market is seeing some “corrective action” after Wednesday’s steep decline, said DailyFx currency strategist Ilya Spivak.
· Economic optimism from easing coronavirus-related lockdown restrictions has dampened demand for the safe-haven metal recently, sending prices lower by 1.3% so far this week.
· Raising hopes for an economic recovery, U.S. private payrolls fell less than expected in May, while China’s services sector returned to growth last month for the first time since January.
· “There is a recovery in risk sentiment... optimism about lockdowns ending and that the economy may be starting to stabilise a bit,” said Spivak.
· Asian shares rose to a two-month high on Thursday as government stimulus expectations lifted investor sentiment, curbing the appeal of gold.
Despite improving risk sentiment, gold prices hold above the key $1,700 an ounce level on simmering China-U.S. tensions, protests in U.S. cities and a weaker dollar.
· The dollar index has fallen about 1% this week, with optimism over the reopening of economies around the world reducing demand for the greenback.
· Market participants now await the European Central Bank’s policy decision at 1145 GMT. The ECB is certain to give more stimulus but the only question is timing — whether later on Thursday or holding out until July.
· In other metals, palladium fell 1.3% to $1,923.06 per ounce, while platinum rose 0.8% to $832.90.
· Silver eased for a third straight session, down 0.6% to $17.57.
· Commerzbank: Indian gold demand 'at rock bottom'
Gold demand in India was still “at rock bottom” in May, said Commerzbank. Analysts cited reports saying India’s gold imports were a mere 1.4 metric tons last month. This was a 99% decline from the 133.6 tons imported in the same month a year ago. Data already showed that April imports ground to a virtual halt.
“The suspension of international flights and the nationwide lockdown to contain coronavirus are still visibly taking their toll, in other words,” said Commerzbank analyst Carsten Fritsch. “Whether the pent-up demand will be released later in the year is questionable, to say the least.
At present, nobody can predict what will happen to consumer behavior in India once the lockdown is lifted. Even if weddings are possible again in the autumn, the record-high local prices are likely to ensure that less gold jewelry is given as gifts.”
Because of weak Asian demand, the gold market has been relying on exchange-traded-fund inflows, which continued again on Tuesday, Fritsch commented.
Reference: CNBC,Kitco
Thai
Eng