Gold slides as economic recovery hopes dent safe-haven bids

File photo by EPA/MARKUS SCHOLZ

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Gold fell on Thursday, pressured by hopes of a swift recovery from the coronavirus-driven recession although losses were capped by prospects of more stimulus and bleak data. Spot gold slid 0.6% to $1,738.97 per ounce by 0250 GMT. U.S. gold futures slipped 0.6% to $1,740.80.

Global equities and crude prices surged overnight on hopes of a rapid recovery from the coronavirus-driven recession. “There is still some optimism and risk-on sentiment about the possibility of a vaccine and talks of lockdown easing and growth slowly picking up,” said National Australia Bank economist John Sharma. “But it not a huge thing and if it was major, we would see gold going below $1,700.”

 

Gold rallied to its highest since October 2012 on Monday, driven by a cocktail of economic damage concerns, U.S.-China tensions, and massive monetary and fiscal stimulus.

 

U.S. Federal Reserve policymakers acknowledged the possibility of further support measures if the economic downturn persists, the minutes from the Fed’s latest policy meeting showed.

 

The latest round of dismal economic indicators have underscored the extent of damage inflicted by the virus, with data on Wednesday showing Britain’s inflation rate sank in April to its lowest since August 2016. The initial U.S. jobless claims data due later in the day will be the next focus for further clues about the health of the world’s top economy. Among other metals, palladium dropped about 3.7% to $2,024.65 an ounce, having hit a one-month high on Wednesday.

 

Platinum fell 2.1% to $832.62. ANZ analysts expect weaker auto sales to be the key downside risk for the platinum group metals this year and see demand contracting for both palladium and platinum.

 

“Mine supply disruptions could protect the downside; still we see prices staying volatile amid the ongoing macroeconomic challenges,” they said. Silver declined 2% to $17.15 per ounce.

 

Via Reuters

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