Gold gains as data paints bleak picture of global economy

Bengaluru — Gold prices gained on Wednesday as bleak data from major economies reflected the fallout from the coronavirus crisis, while the initial euphoria over a potential Covid-19 vaccine fizzled and gave way to safe-haven demand.

Spot gold was up 0.2% to $1,747.19/oz, as of 2.56am GMT. US gold futures rose 0.4% to $1,753.30.

In testimony before the US Senate banking committee, Federal Reserve chair Jerome Powell said the Fed was looking at extending access to the credit facilities to additional borrowers, including states with smaller populations.

“What the Fed does in the next few months will be pretty important, and certainly Powell did indicate that the rates would remain near zero for foreseeable future,” ANZ analyst Daniel Hynes said.

Markets now await the Federal open market committee’s April 28-29 policy meeting minutes due at 6pm GMT.

The US central bank has kept interest rates near zero and poured in huge stimulus to support the virus-ravaged economy.

Lower interest rates generally reduce the opportunity cost of holding the non-yielding bullion. US homebuilding dropped by the most on record in April, lifting the fear the pandemic would lead to the deepest economic contraction in the second quarter since the Great Depression.

The data added to a volley of dismal US economic statistics this month — a loss of 20.5-million jobs and a collapse in retail sales and manufacturing production.

In Japan, business confidence collapsed in May, hitting decade lows as firms braced for a protracted period of economic weakness, the Reuters Tankan survey showed.

The optimism from early data for a vaccine faltered after a medical news website reported it was insufficient, causing US equities to fall and putting Asian stocks under pressure.

Elsewhere, palladium fell 0.8% to $2,043.63/oz and silver eased 0.5% to $17.49, while platinum rose 0.2% to $834.05.

Reuters