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(Reuters) – Gold rose on Friday to trade below a three-week high reached in the previous session, as cracks widened in Sino-U.S. relations and investors worried a recovery from coronavirus-induced economic slump would be slower than expected.
FILE PHOTO: Newly casted ingots of 99.99% pure gold are stored after weighing at the Krastsvetmet non-ferrous metals plant, one of the world’s largest producers in the precious metals industry, in the Siberian city of Krasnoyarsk, Russia November 22, 2018. REUTERS/Ilya Naymushin
Spot gold gained 0.2% to $1,732.01 per ounce by 0349 GMT, having hit its highest since April 23 at $1,735.96 on Thursday. U.S. gold futures rose 0.1% to $1,742.60.
“It’s been clear, as more economic data is released, that some of the damage that has been done (to the global economy) would take much longer to repair than expected,” said Michael McCarthy, chief strategist at CMC Markets.
It is becoming increasingly apparent that a snap-back or a V-shaped economic recovery is very unlikely, McCarthy said, adding that this meant interest rates would stay low for longer, adding to the appeal for gold.
Non-yielding bullion tends to gain in a low-interest environment and when economic uncertainties rise.
An already-dismal near-term U.S. economic outlook has darkened further, a Reuters survey showed. While a recovery is still forecast in the second half of the year, it won’t come close to regaining the ground it lost this year.
British manufacturers also think it will take longer to recover from the economic impact of COVID-19 than just a couple of weeks ago, according to an industry survey.
Gold has gained 1.8% so far this week, which could be its biggest in three weeks, supported by signs of prolonged economic weakness and as tensions between the United States and China flared up.
U.S. President Donald Trump said on Thursday the pandemic had cast a pall over his January trade deal with China, and suggested he could even cut ties with Beijing.
“Markets are very concerned… Any turning up of the heat between these two nations could be bad news for everyone but good news for gold,” McCarthy said.
Reflecting investor sentiment, SPDR Gold Trust holdings, the world’s largest gold-backed exchange-traded fund, rose 1.15% to 1,104.72 tonnes on Thursday.
Among other precious metals, palladium gained 0.5% to $1,843.19 an ounce, but was on track to post its seventh straight weekly drop.
Platinum eased 0.1% to $767.58 per ounce. Silver rose 1.2% to $16.06/ounce, and was set to mark its largest weekly gain in five.
Reporting by Harshith Aranya and K. Sathya Narayanan in Bengaluru; Editing by Subhranshu Sahu
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