September 07, 2020
Gold gains as global growth worries support demand
Gold edged higher on Monday after weak U.S. data raised concerns over a quick economic rebound from the coronavirus-led slump and cemented hopes that lower interest rates would last longer.
Spot gold was up 0.2% at $1,935.50 per ounce , moving further away from a one-week low of $1,916.24 touched on Friday. U.S. markets are shut for the Labor Day holiday on Monday.
U.S. gold futures rose 0.5% to $1,943.40.
“The general theme from last week’s U.S. jobs report showed that the recovery is continuing to slow. So really, the payroll gains were weak in the overall context,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.
“Also, the lower for longer interest rates narrative continues to chime well for the gold bulls right now.”
Federal Reserve Chairman Jerome Powell said the U.S. jobs report for August was “a good one,” but noted that with gains likely to slow, the central bank is planning to keep its foot on the monetary policy gas pedal for years.
Central banks around the world, including the Fed have rolled out massive stimulus measures and slashed interest rates near zero to mitigate the virus impact on the economy, helping gold climb more than 28% so far this year.
Lower interest rates decrease the opportunity cost of holding nonyielding bullion.
Limiting gold’s advance, the dollar index held steady against its rivals after hitting a one-week high in the previous session.
Investors’ focus for this week will be on European Central Bank’s monetary policy decision on Thursday.
Spot gold may bounce to $1,949, as it has cleared a resistance at $1,936 per ounce, said Reuters technical analyst Wang Tao.
Elsewhere, silver gained 0.4% to $26.99 per ounce, platinum rose 0.8% to $901.77 and palladium climbed 0.5% to $2,308.15.