By Barani Krishnan
Investing.com - Fed Chairman Jay Powell aimed a $2.3 trillion bazooka at the jobs-killing virus and shot gold to an eight-year high.
Gold futures for June delivery on New York’s COMEX settled up a whopping $70.80, or 4.2%, at $1,736.20 per ounce. It earlier scaled $1,754.20 — the highest for a front-month gold futures on COMEX since February 2012.
Spot gold, which tracks live trades in bullion, trailed the highs in futures, probably because of the scarcity in physical gold. Spot gold was up $35.81, or 2.2%, at $1,680.78 by 3:11 PM ET (19:11 GMT). The session high for bullion was $1,690.53.
The Federal Reserve announced as much as $2.3 trillion in additional aid for Covid-19 on Thursday, including a pledge to provide support to risky corners of financial markets that have been hardest hit by fallout from the pandemic. The Fed support came as U.S. jobless claims surged for a third-straight week, rising by 6.6 million to total about 17 million jobs lost in just three weeks.
Congress approved last month a separate $2 trillion Covid-19 aid package as the Trump administration and its Democratic rivals came together in a bipartisan act to try and rescue an economy, which analysts said would most likely slip into recession by the second half of 2020.
“All these sea of money that Congress and Fed is creating is proving to be a bonanza for gold, which the safe-haven crowd sees as a sure sign to take the yellow metal to $1,800 highs and possibly beyond the $1,900 record levels,” said Tariq Zahir at Tyche Capital Advisors, an oil-focused fund that also trades gold.
The $1,700 level had been an important resistance mark for gold. Until Thursday, COMEX futures broke past the barrier only on four occasions this year — the first in January, then in March and twice earlier this week -- before falling back almost immediately.