Gold ended higher on Thursday, following losses in the last two sessions, finding support as the latest weekly climb in U.S. jobless claims fed investor concerns about the economic impact of efforts to contain the COVID-19 pandemic.
The U.S. weekly jobless claims report “reminded traders and investors of the severely damaged state of U.S. and other major world economies,” said Jim Wyckoff, senior analyst at Kitco.com.
Almost 3.2 million people applied for unemployment benefits last week after the coronavirus cost them their jobs. The number of initial jobless claims processed in the week ended May 2 was less than half the crisis peak of 6.9 million at the end of March. Still, some 33 million new claims have been filed in seven weeks.
The report comes ahead of the monthly employment report from the U.S. Labor Department which is “expected to show a loss of over 20 million jobs in April and an unemployment rate north of 15%, after a jobless rate of just 4.4% reported in March,” said Wyckoff, in a daily note. See MarketWatch’s U.S. economic calendar
On Comex, June gold GCM20, +2.61% rose $37.30, or 2.2%, to settle at $1,725.80 an ounce on Comex. Meanwhile, July silver SIN20, +4.46% rose 57.5 cents, or 3.8%, to $15.59 an ounce. Gold lost more than 1% on Wednesday as the U.S. dollar strengthened and the reopening of some economies around the world appeared to dent demand for the haven metal.
Read:Here’s what gold does when the federal government goes on a borrowing binge
In Thursday dealings, the U.S. dollar turned a bit lower, with the ICE U.S. Dollar Index DXY, -0.24%, a gauge of the currency against a basket of six major rivals, down 0.3% at 99.83 after an earlier climb above the 100 mark. U.S. benchmark stock indexes were up as gold futures settled. The precious metal often trades in an inverse relationship with stocks and the U.S. dollar.
“In our view, historical correlations are rules that can be broken and we think that these days, gold can continue to win even if equities improve, as investors are acutely aware of the risk that they are taking on and will seek out hedges like gold,” said Christopher Louney, analyst at RBC Capital Markets, in a note.
On Thursday, the Bank of England left interest rates unchanged at 0.1% and held its quantitative easing program steady, though a scenario published by the central bank shows the U.K. economy falling 14% this year. Aggressive monetary policy easing by major central banks has offered support to gold as nations around the world move to stem the effects of the pandemic on their economies.
For now, Chintan Karnani, chief market analyst at Insignia Consultants, said traders will “prefer to be long in gold than short before the U.S. April nonfarm payrolls” data due out Friday.
In other metals trading, July copper HGN20, +1.55% added 1.4% at $2.3805 a pound. July platinum PLN20, +2.32% rose 2.2% to $782.10 an ounce, while June palladium PAM20, +3.65% climbed 4.4% at $1,835.70 an ounce.
The gold-backed SPDR Gold Trust exchange-traded fund GLD, +1.85% moved up by 1.7%.
Globally, gold-backed ETFs added 170 metric tons in April, lifting total holdings to a new all-time high of 3,355 metric tons, according to a report from the World Gold Council released Thursday.
“Continued record growth for gold-backed ETFs, despite some rebound in other asset classes, highlights that investors are embracing gold’s role as a store of value and source of liquidity and returns,” Juan Carlos Artigas, head of research at the World Gold Council, said in a statement.
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