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Gold Rises as Jobless Claims Revive Concerns for Economic Outlook

CommoditiesMay 07, 2020 11:57AM ET
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© Reuters.

By Geoffrey Smith 

Investing.com -- Gold prices rose on Thursday as another 3 million Americans filed for jobless benefits, reviving concerns about the outlook for the U.S. economy.

“As more states start the re-opening process over the coming weeks we are likely to see steeper declines in initial claims, but the numbers are likely to remain horrible and well in excess of anything seen during the Global Financial Crisis,” said James Knightley, chief international economist with ING.

Prices were initially subdue in early trading in New York, but picked up after San Francisco Fed President Mary Daly talked up the possibility of further action from the Federal Reserve, noting that price pressures were still skewed to the downside.

By 11:50 AM ET (1550 GMT), gold futures for delivery on the Comex exchange were up 1.6% at $1,714.85 an ounce, while spot gold was up 1.3% at $1,707.12.

Silver futures were up 2.9% at a two-week high of 15.44 an ounce, while platinum futures were up 1.9% at $779.95.

The narrative of looming currency debasement remains intact but may curiously lead to some downward pressure on gold in the near term.

The Turkish lira fell to an all-time low against the dollar on Thursday, prompting speculation that the Central Bank of Turkey, which had bought more than 140 tons of gold since its mini-currency crisis in 2018, may be forced to sell some of its hoard to defend the currency. It may be easier to sell its gold rather than its officially-stated foreign exchange reserves, as much of these appear to have been pledged to commercial banks.

Reserve data from the Chinese central bank earlier showed no such pressure – its holdings remained unchanged in April.

Gold prices continue to be fundamentally supported by looser monetary policy. The central bank of Brazil cut its key rate by 75 basis points to a new record low of 3% on Wednesday, while the Bank of England said that its monetary policy council recognized the possible need for more quantitative easing, even though it made no change to its policy stance on Thursday. European Central Bank Vice President Luis de Guindos meanwhile told EU lawmakers that the ECB doesn’t intend to curtail its bond buying just because the German Constitutional Court doesn’t like it.

Gold Rises as Jobless Claims Revive Concerns for Economic Outlook
 

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Comments (9)
Axton Chandra
Axton Chandra May 07, 2020 7:13PM ET
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“Gold up suddenly for an unknown reason after it’s been down for 3 whole sessions” would make a better article
Tubsy SkinntFinger
TubsSkinnyFinger May 07, 2020 4:56PM ET
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Classic when everyone knows the news is complete BS.
Ankit Kansal
Ankit Kansal May 07, 2020 2:33PM ET
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faraud
steven gitt
steven gitt May 07, 2020 1:05PM ET
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why financial journalism and the markets are complete jokes, top two headlines today: "Gold Rises as Jobless Claims Revive Concerns for Economic Outlook", "Wall St jumps as PayPal outlook, China data fuel recovery hopes"
M Yaqoobi Yaqoobi
M Yaqoobi Yaqoobi May 07, 2020 1:05PM ET
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Hahaha
Sia BangWen
Sia BangWen May 07, 2020 1:04PM ET
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Rubbish! Look at the bond yield
Kristof Naessens
Kristof Naessens May 07, 2020 1:04PM ET
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Gold is rising due to the endless money printing of the central banks. The stock markets are not markets anymore, it is the FED!
Chase McAllister
Chase McAllister May 07, 2020 12:55PM ET
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that's not why gold is rising
Pwr Strk
Pwr Strk May 07, 2020 12:14PM ET
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your main headline is simultaneously stating that China data is fueling recovery hopes... talk about cognitive dissonance
Pwr Strk
Pwr Strk May 07, 2020 12:14PM ET
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the truth is gold is rising because it is just another stock
Pwr Strk
Pwr Strk May 07, 2020 12:14PM ET
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which works as a hedge
Billy Jackson
itsSassy May 07, 2020 12:08PM ET
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Since wen do the unemployed buy gold?
Sg Trader
Sg Trader May 07, 2020 12:08PM ET
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haha just some rubbish writer claiming they know the reason behind gold rises. trying to fit in some explanation.
alex gallegos
alex gallegos May 07, 2020 12:08PM ET
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Margin buyers.
 
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