NEW YORK: Gold rose on Wednesday as an unexpected rise in US jobless claims slammed the brakes on the previous day’s rally on Wall Street, and the precious metal bounced off a sharp slide toward $1,800 in prior sessions.
Spot gold rose 0.2% to $1,810.41 an ounce at 12:20 p.m. EST (1720 GMT), a day after hitting its lowest since July 17 at $1,800.01. US gold futures gained 0.3% at $1,809.10.
The S&P 500 and the Dow retreated on signs of a slowdown in the labour market recovery. On Tuesday, Wall Street rallied to a record as progress on vaccines and a smooth White House transition bolstered bets on a swifter economic rebound.
The jobless data is supportive for gold “just on notions that we’ve still got a very dark period ahead before we get through this pandemic,” Kitco Metals senior analyst Jim Wyckoff said.
A subdued dollar also spurred gold by making it cheaper for those holding other currencies.
The dollar’s slide “along with the technical support (for gold near $1,800), convinced some people to maybe stop selling and acquire some more positions,” said Bart Melek, head of commodity strategies at TD Securities.
“The next six months are going to be very difficult; we’re going to experience significantly below potential growth, and governments and central banks will have to significantly add to stimulus to make sure we don’t get the second wave transform into a long period of economic underperformance,” Melek added.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion, which has risen over 19% this year benefiting from its status as a hedge against inflation and currency debasement.
The focus next is on minutes of the US Federal Reserve’s last meeting, due at 1900 GMT.
Silver was up 0.5% at $23.37 an ounce, platinum edged up 0.6% to $966.59 and palladium was down 0.5% at $2,336.97.Reuters
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