Stronger dollar takes shine off gold

Bengaluru — Gold was little changed on Friday as investors awaited US non-farm payrolls data for further cues on the economic effect of the coronavirus, while a stronger dollar capped the gains.

Spot gold rose 0.1% to $1,613.32/oz by 4.22am GMT, after a near 1.5% jump on Thursday as record high US jobless claims intensified fears about economic damage due to the virus and drove investors towards the safe-haven metal.

The metal was down 0.4% for the week after an 8% jump in the previous week.

US gold futures fell 0.2% to $1,634.70/oz on Friday. Gold could not build a rally because of the stronger dollar, said DailyFx currency strategist Ilya Spivak.

The dollar was little changed against key rivals, but hovered close to a one-week high hit on Thursday, as investors worried about the prospect of a global recession continued to take shelter in the greenback.

“If [the US non-farm payrolls] data is really bad, in the sense that the US is already in deep recession, gold could actually go down as demand for cash is going to heat up again,” Spivak said.

Economists are forecasting job losses of 100,000 for March, a sharp reversal from gains of 273,000 in February, according to a Reuters poll. The data is due at 12.30pm GMT.

Gold, considered a safe store of value during times of economic or political uncertainties, has gained more than 6% so far this year, but it did see sharp sell-offs recently as a global rout in equities prompted investors to sell the metal for cash and to meet margin calls.

Meanwhile, the coronavirus pandemic continued to explode in the US and the death toll climbed in Italy and Spain, with a Reuters tally showing about 1-million cases as of Thursday.

As part of the US Federal Reserve’s efforts to keep markets functioning smoothly amid the pandemic, the central bank’s balance sheet increased to a record $5.86-trillion this week.

Investors think the Fed’s move may prevent a credit crisis, but certainly not a recession, Spivak said. Highlighting the economic toll from the pandemic, China’s services sector struggled to rebound in March, while the US growth rate likely declined more than 7%.

However, Asian markets looked to latch onto Wall Street’s gains after crude prices notched their biggest one-day surge on record.

SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.33% to 971.97- tonnes on Thursday.

Palladium rose 1% to $2,235.50/oz, while platinum fell 0.3% to $724.98/oz. Both metals were set to register a weekly loss. Silver fell 1% to $14.39/oz.

Reuters