Metals Stocks: Gold prices climb as investors parse jobless claims report

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Gold futures on Thursday were headed higher as investors digested an economic report on the labor market, which highlights a growing sense of the challenges the U.S. economy may face in recovering from the COVID-19 pandemic.

U.S. unemployment data showed that those seeking jobless benefits rose 2.98 million in week ended May 9. The number is higher than consensus estimates from economists polled by MarketWatch for 2.7 million but indicates that applications for unemployment compensation peaked at a seasonally adjusted 6.9 million in late March and has fallen steadily over the past month.

The precious metal gained support from comments from Federal Reserve Chairman Jerome Powell who on Wednesday described the path forward for the domestic economy from the deadly pathogen as uncertain, though the central-bank boss appeared to reject the idea of pushing key interest rates, which stand at a range between 0% and 0.25%, to subzero levels, which would support bullion prices.

“Gold saw plenty of activity on Wednesday around Powell’s appearance and even managed to cling onto some of those gains despite his insistence that negative rates is not something they’re considering,” wrote Craig Erlam, senior market analyst at Oanda Europe.

Gold for June delivery on Comex GC00, +0.62% rose $8.60, or 0.5%, at $1,725 an ounce, after rising 0.6% on Wednesday. Meanwhile, July silver SIN20, +0.37% headed 4 cents, or 0.3%, higher at around $15.72 an ounce, following a 0.2% slide in the previous session.

Gold bears may take some heart in the number of unemployed decelerating, which could take some of the shine off the metal. However, gold bulls are still upbeat on the outlook for the metal, as many investors view the current environment as analogous or worse than the 2007-08 financial crisis, which rocked global markets.

“If a similar pattern is to be repeated, then the precious metal can hit $3,500 and even $4,000 in the coming three years.” wrote Hussein Sayed, chief market strategist at FXTM, in a daily research report.

“While history does not necessarily repeat itself, there are so many ingredients to see gold marching higher,” he said.

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