By Peter Nurse
Investing.com - Gold prices pushed higher Monday, as investors head back towards this safe haven amid doubts about the global economic recovery from the damage caused by the coronavirus.
At 09:40 AM ET (1340 GMT), gold futures on New York’s COMEX rose 1% to $1,722.75.
Late Monday, the World Bank, in its latest Global Economic Prospects report, estimated that global economic output would contract by 5.2% in 2020 due to the coronavirus.
Advanced economies are expected to shrink 7.0% in 2020, the report said, while emerging market economies will contract 2.5%, their first since aggregate data became available in 1960.
This tends to suggest further gains for the yellow metal ahead, despite Friday’s sharp fall on the back of the nonfarm payrolls report that 2.5 million Americans re-entered the workforce in May, confounding expectations for a job loss of 8 million.
“We remain bullish over the medium term,” according to ANZ senior commodity strategist Daniel Hynes and commodity strategist Soni Kumari, in the bank’s June commodity call, expecting to see gold climbing to $1,900 an ounce come December.
“The macro backdrop is challenging, despite market confidence in the trend towards normalised growth. The expansion of central banks' balance sheets shows no sign of abating, while geopolitical tensions escalate. We think those investors who continue to raise their allocation to precious metals are sitting on a gold mine.”
Attention will now turn to the U.S. Federal Reserve’s two-day policy meeting that concludes on Wednesday for clues on further stimulus measures and the policy rate.
This comes after the National Bureau of Economic Research, the body which acts as the arbiter for determining U.S. business cycles, declared that the U.S. economy had entered a recession in February - bringing to an end the longest period of economic expansion in U.S. history.