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Gold flirts with record peak on bleak economic outlook

Gold flirts with record peak on bleak economic outlook

Gold extended its rally on Thursday to within touch of the previous day's record peak, as the COVID19 pandemic clouded the economic outlook and boosted bullion's safehaven allure, though the rapid pace of gains could prompt some profittaking.

Gold extended its rally on Thursday to within touch of the previous day’s record peak, as the COVID-19 pandemic clouded the economic outlook and boosted bullion’s safe-haven allure, though the rapid pace of gains could prompt some profit-taking.

Spot gold was up 0.5% at $2,050.27 per ounce by 0928 GMT, after hitting an all-time high of $2,055.10 on Wednesday. U.S. gold futures rose 0.7% to $2,063.50.

“The upward momentum in gold and silver is still fairly solid at this stage because there’s a lack of interest in other asset classes; many factors of the economy are still struggling,” Bank of China International analyst Xiao Fu said.

Gold’s gains also came despite a slight uptick in the U.S. dollar, which also benefited from receding risk sentiment as investors awaited U.S. jobs data for confirmation on the state of the world’s largest economy even as Washington remained deadlocked over a large relief package.

The U.S. jobless claims are due at 1230 GMT, while payrolls figures will be released on Friday.

Gold has rallied about 35% this year as it’s considered an asset that should hold its value while the pandemic and money printing by central banks erode the value of others.

While the outlook for gold remains fundamentally positive, a correction is also increasingly likely, analysts said.

“The problem is that sometimes a story is so strong that a market rallies too quick for fundamentals to justify, and when price momentum begins to slow, those who got in too late give up and sell out early. That can inspire a pretty rapid technical correction,” IG Markets analyst Kyle Rodda said.

Silver, meanwhile, gained 2.8% to $27.78 per ounce having hit its highest since April 2013 at $27.85.

Platinum rose 0.9% to $975.80 and palladium was up 1% at $2,203.25.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

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  • First Published: August 6, 2020, 3:33 PM IST
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