Gold eyes best month since January 2012 as weak US data dents dollar

The US dollar fell to a two-year low and was on course for its worst month in a decade, making bullion cheaper for investors holding other currencies.
A salesman displays gold bars inside a jewellery shop in Hyderabad.(Reuters File Photo)
A salesman displays gold bars inside a jewellery shop in Hyderabad.(Reuters File Photo)
Updated on Jul 31, 2020 02:50 PM IST
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ByReuters | Posted by Kanishka Sarkar

Gold rose on Friday en route to its best month in 8-1/2 years as the dollar slid further after dismal US data added to doubts about a swift recovery from the pandemic-induced economic slump, driving investors towards the safe-haven metal.

Spot gold was up 0.8% at $1,975.44 per ounce by 0651 GMT after snapping a nine-session winning streak on Thursday. US gold futures rose 1.5% to $1,970.70.

The US dollar fell to a two-year low and was on course for its worst month in a decade, making bullion cheaper for investors holding other currencies.

Apart from US data showing the deepest economic contraction in at least 73 years in the second quarter, and a rise in unemployment benefits, the dollar was also hurt as President Donald Trump raised the idea of delaying the November 3 presidential election.

“The weak Q2 GDP also underscores the point of a weak economy, and investors seeking refuge in gold,” said National Australia Bank economist John Sharma.

A deterioration in the coronavirus situation, escalation in geopolitical tensions and further declines in the dollar could push gold above the $2,000 level, he added.

Gold has risen nearly 11% so far this month, its biggest monthly percentage gain since January 2012, having soared to an all-time high of $1,980.57 on Tuesday.

The jump took gains for the year to nearly 30%, driven by a worsening pandemic and low interest rates globally amid widespread stimulus from central banks since the metal is considered a refuge against inflation and currency debasement.

“However, further gains are reliant on investor demand, with consumer demand showing no signs of recovery,” ANZ analysts said in a note.

Among other metals, silver climbed 2.6% to $24.16 an ounce, on course for its best month on record - up over 30%, with additional support coming from hopes for a revival in industrial activity.

Platinum rose 0.8% to $909.98 and palladium gained 0.7% to $2,096.84.

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Thursday, December 09, 2021