Gold prices end higher as U.S. jobless claims jump to a record
Gold prices ended higher Thursday, finding support as the U.S. dollar weakened, after a jump in U.S. jobless claims to a weekly record, with the data providing a grim insight into the impact of the coronavirus outbreak in the world’s largest economy.
“Gold will resume its role as a favored safe-haven as traders begin to try to model how bad the global economy will get and knowing that governments and central banks are doing everything they can,” said Edward Moya, senior market analyst at Oanda.
The number of Americans who applied for unemployment benefits last week rocketed to a record 3.28 million, reflecting a swath of business closures and the cessation of normal personal activities as the federal and local governments attempt to curb the spread of the deadly illness.
Gold should now “have a clear path higher as it seems global stimulus has taken away the scramble for cash liquidation trade,” said Moya, in a daily note.
The U.S. Senate passed a $2 trillion coronavirus relief bill late Wednesday, designed to help the economy weather the economic impact from the disease. However, the bill must be passed on Friday by the House to send it to President Donald Trump, who is almost certain to sign it into law.
Gold for April delivery GCJ20, 0.214% on Comex rose $17.80, or 1.1%, to reach $1,651.20 an ounce after the precious commodity shed 1.7% on Wednesday.
Gold prices continue to “fluctuate off swings in the U.S. dollar and capital flows in and out of defensive havens,” said Colin Cieszynski, chief market strategist at SIA Wealth Management Inc. The ICE U.S Dollar Index DXY, -1.593% traded down 1.6% in Thursday dealings as gold futures settled.
Separate economic data showed the pace of growth in the U.S. economy was left at 2.1% in the fourth quarter in the final estimate from the Commerce Department released on Thursday. Economists are certain first-quarter growth will be weaker than the October-December period due to the coronavirus shutdown but an even-larger contraction is expected for the April-June quarter.
“Although short-term prices remain volatile day to day and even hour to hour, the large amounts of monetary stimulus...may continue to provide a longer-term underlying tailwind as has been the case since last summer,” he told MarketWatch. That stimulus includes both interest rate cuts and asset purchase programs, which can depress the value of paper currencies relative to hard assets like gold, he said.
Among other metals Thursday, May silver SIK20, -1.836% shed 19.7 cents, or 1.3%, to end at $14.676 an ounce, after rising 4.3% a day earlier.
May copper HGK20, -1.066% shed 2.6 cents, or 1.2%, to $2.178 a pound.
April platinum PLJ20, -1.489% lost $8.40 an ounce, or 1.1%, to $737.10 an ounce following a 6.2% rise in the previous session, and June palladium PAM20, -1.49% gave up $21.50, or 1%, at $2,226.10 ounce after a nearly 26% gain Wednesday.
Sentiment in the platinum group markets “definitively favors the palladium market,” analysts at Zaner Metals wrote in a note Thursday, citing Wednesday’s “unbelievable” rise in palladium prices.
“The prominent driving force for all precious metals in the days ahead might be the gradual winding down of mining operations in an attempt to control the spread of the virus,” they said. “It should be noted that one mine shut down in South Africa is 160,000 ounces of palladium production, which could then rebuild the world palladium deficit from the recently downwardly revised estimate of only 200,000 ounces.”