By Barani Krishnan
Investing.com – Just a week after being crushed by the best U.S. jobs report in three months, the gold rally is back and alive, as fears about a second coronavirus wave in the United States prop up the safe haven.
The yellow metal ended the current week up more than 3%, virtually recouping all its loss in the previous week to June 5 — a decline that came on the back of the surprising 2.5 million jobs gain for May, reported by the U.S. Department of Labor.
U.S. gold futures for August delivery settled down $2.50, or 0.1%, at $1,737.30 per ounce. For the week, the gold futures benchmark rose more than $54, or 3.1%.
Spot gold, which tracks real-time trades in bullion, rose $4.76, or 0.3%, to $1,732.32 by 3:34 PM ET (19:34 GMT).
“Market turmoil has gold traders salivating at another chance at breaking above the $1,750 level,” said Ed Moya, an analyst at New York-based online trading platform OANDA.
“Gold will see both steady safe-haven demand as many investors take heed to Fed Chair Powell’s cautious outlook and as a raft of central banks will deliver more stimulus next week,” Moya said. “Over the next week, gold will have its eyes on $1,800 as it will remain powered by the stimulus trade, virus angst, and U.S.-China tensions.”
The Fed left U.S. interest rates at near zero in its monthly review earlier this week, with Chair Powell saying he did not expect rates to rise until the end of 2022 — suggesting that economic recovery from the Covid-19 could take at least two years. The central bank is, meanwhile, using its virtual limitless funds to prop up the economy and financial markets and lend to businesses caught up in the crisis.
Gold’s run-up this week was also helped by Goldman Sachs Group Inc (NYSE:GS), which said it expects the yellow metal to reach $1,800 per ounce on a 12-month basis. The Wall Street firm, whose calls on commodities are often closely followed, said gold had potential to arch beyond $2,000 from the tail risk of above-target inflation.
Gold Up 3% on Week, Boosted by Virus Fears
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