(Reuters) – Gold eased on Thursday as U.S. Federal Reserve Chairman Jerome Powell downplayed the possibility of negative interest rates, but his warning of an extended period of weak economic growth capped the metal’s losses.

Spot gold was down 0.2% to $1,712.58 per ounce by 0336 GMT, having jumped 0.8% in the previous session on Powell’s dour view on the recovery of an economy battered by the coronavirus pandemic. U.S. gold futures rose 0.3% to $1,721.60.

“Powell’s comments that he is not keen on negative interest rates have put a damper on (gold’s) rally,” said Avtar Sandu, a senior commodities manager at Phillip Futures.

However, Sandu said the overall speech was bullish for gold, adding that: “Prices rallied after Powell said economies are not doing well because of the virus and you can expect further stimulus. He’s expecting more from the fiscal side.”

On Wednesday, Powell vowed to use the central bank’s power as needed, and called for additional fiscal spending to help the virus-hit economy.

All eyes are now on the weekly U.S. jobless claims data due at 1230 GMT for more clues about the economic outlook.

Central banks and governments around the globe have unleashed unprecedented fiscal and monetary support to shield their economies from the pandemic.

Gold tends to benefit from widespread stimulus measures as it is often seen as a hedge against inflation and currency debasement.

Underscoring the economic impact of the epidemic, U.S. producer prices fell in April by the most since 2009, leading to the largest annual decline in nearly 4-1/2 years.

“Low inflation is ostensibly gold-bearish, but deflation may prompt a higher degree of monetary accommodation, which is gold-positive, but Powell did throw ice water on negative rates,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

The virus that causes COVID-19 could become endemic like HIV, the World Health Organization said, warning against any attempt to predict how long it would keep circulating and calling for a “massive effort” to counter it.

SPDR Gold Trust holdings, the world’s largest gold-backed exchange-traded fund, rose 0.78% to a fresh seven-year high of 1,092.14 tonnes on Wednesday.

Palladium climbed 0.8% to $1,832.71 an ounce and platinum gained 1.3% to $766.72, while silver fell 1.1% to $15.47.