Gold gains as gloomy U.S. economic outlook dents dollar
· 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 0.3% at $1,947.83 per ounce by 0503 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.
· U.S. gold futures rose 0.5% to $1,956.10.
· "A deterioration in U.S. 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.
· 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 U.S. 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.
· Gold Price Prediction – Prices Edge Higher Following Soft US Jobless Claims
Gold prices rebounded slightly as the dollar declined and US yields moved lower. The rally in the greenback is experiencing resistance following a softer than expected US jobless claims report. The Philly Fed Manufacturing Index also came in softer than expected weighing on the greenback which paved the way for higher gold prices.
Technical analysis
Gold prices rebounded slightly following Wednesday 3% decline. Prices were unable to recapture support near the 10-day moving average at 1,964. Target support is seen near the 50-day moving average at 1,859. Medium-term momentum remains negative as the MACD histogram is printing in the red with a sliding trajectory which points to lower prices. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal.
· Iron ore prices have hit multi-year highs as demand soars on infrastructure investment
Iron ore prices have soared to multi-year highs this week as Chinese government stimulus spurs infrastructure building, boosting prices of the commodity even amid a global pandemic.
Spot iron ore prices rose to around $130 a dry metric ton on Tuesday, according to commodity price reporting agency Argus. This is the highest level since 2014.
· Elsewhere, silver gained 0.6% to $27.40 per ounce andwas poised for a weekly rise of about 3.8%
· Platinum climbed 0.6% to $922.77, while palladium fell 0.5% to $2,170.53.
Reference: Reuters, FXEmpire
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