Gold Picks up as Caution Returns After Heady Week

By Geoffrey Smith

Investing.com -- Gold prices bucked up at the end of a difficult week in which rotation into cyclical assets left havens unloved.

By 11:30 AM ET (1530 GMT), gold futures for delivery on the Comex exchange were up 1.3% at $1,736.00 a troy ounce, while spot gold was up 0.9% at $1,734.58 an ounce. As such, the yellow metal is on track to end the week roughly where it started it.

Silver futures again outperformed, rising 2.2% to a three-month high of $18.36 an ounce, while platinum futures were 0.3% at $870.95 an ounce. Palladium futures fell 1.0% after Renault (PA:RENA) became the second major automaker in as many days to announce big cuts in production capacity, signalling less demand for the metal in the years ahead.

The downsized Nissan-Renault alliance will have to focus more on electric vehicles, which demand other metals, notably copper. Copper futures, however, have struggled to make headway beyond the $2.40 level, due not least to concerns for Chinese demand as President Donald Trump prepares to chastise the country for what the U.S. sees as ending Hong Kong's autonomy. Trump is due to give a press briefing on new measures against China later. Such details as have leaked out so far do not appear to include meaningful economic sanctions or tariffs, however.

Elsewhere, Federal Reserve Chairman Jerome Powell again played down any suggestion of pushing official interest rates below zero in a video conference with former Fed Vice-Chair Alan Blinder. Analysts suggest the need for more monetary stimulus, which would be bullish for gold, has receded somewhat this week amid signs of the economy reopening.

Continuing jobless claims fell for the first time since the outbreak of the coronavirus last week, and figures released on Friday showed personal income rising sharply and spending falling just as sharply as consumers were forced into involuntary savings by lockdowns.

"This is the basis for believing that spending will rebound strongly as lockdowns are eased, but it will also make it easier for Republicans in the Senate to keep pushing back on the idea of further stimulus, for a while at least," said Pantheon Macroeconomics chief economist Ian Shepherdson in a note to clients.

"April spending collapsed across-the-board, with double-digit falls in durable goods, non-durable goods, and services," he added. "This will mark the floor; a host of indicators point clearly to increased spending in May."

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