Gold gains as global growth worries support demand
[BENGALURU] Gold edged higher on Monday after weak US 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 per cent at US$1,935.50 per ounce by 3.41am GMT, moving further away from a one-week low of US$1,916.24 touched on Friday. US markets are shut for the Labor Day holiday on Monday.
US gold futures rose 0.5 per cent to US$1,943.40.
"The general theme from last week's US 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 US 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 per cent so far this year.
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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 US$1,949, as it has cleared a resistance at US$1,936 per ounce, said Reuters technical analyst Wang Tao.
Elsewhere, silver gained 0.4 per cent to US$26.99 per ounce, platinum rose 0.8 per cent to US$901.77 and palladium climbed 0.5 per cent to US$2,308.15.
REUTERS
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