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Gold falls to 1-week low on hopes of economic recovery

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·2-min read
FILE PHOTO: A Saudi jeweller wearing a protective face mask arranges gold jewels at a jewellery store during the holy month of Ramadan, following the outbreak of the coronavirus disease (COVID-19), in Riyadh
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By Eileen Soreng

(Reuters) - Gold fell more than 1% on Thursday to a one-week low as hopes for a recovery from economic damage inflicted by coronavirus-induced restrictions dented bullion's safe-haven appeal.

Spot gold was down 1.5% to $1,722.84 per ounce by 11:41 a.m. EDT (1541 GMT), having earlier fallen to $1,716.44. U.S. gold futures fell 1.8% to $1,720.90 per ounce.

"All the supportive programmes from the central banks and the government has created an environment where we are not as worried ... Markets have been increasingly pricing in the possibility that things might normalise," Bart Melek, head of commodity strategies at TD Securities, said, adding there was not a huge amount of impetus to buy gold.

According to the latest data millions more Americans filed for unemployment benefits last week. Last week's claims reading was in line with economists' expectations, and marked the seventh straight weekly decline.

Also weighing on the bullion was a firmer dollar index, which was up 0.3%, making gold more expensive for holders of other currencies.

"Gold seems to have lost a little momentum since breaking above $1,750, and the rise in the dollar today doesn't seem to be helping," OANDA analyst Craig Erlam said.

"However, the enormous amount of monetary stimulus in the system, the need for that to continue for some time and the inflation risk are all bullish for gold in the longer term."

Gold prices climbed to their highest since October 2012 at $1,764.55 earlier this week, mainly driven by monetary and fiscal stimulus, recession fears and U.S.-China tensions.

U.S. Federal Reserve policymakers acknowledged the possibility of further support measures if the economic downturn persists, the minutes from their latest policy meeting showed.

Elsewhere, palladium dropped 4% to $2,016.72 an ounce after hitting a one-month high on Wednesday. Platinum shed 2.4% to $830.64 per ounce.

Silver slipped 2.9% to $17.00 per ounce.

(Reporting by Eileen Soreng in Bengaluru; Editing by Tom Brown)

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