Gold gains as gloomy U.S. economic outlook dents dollar

GOLD - SINGAPORE. Gold prices rose on Friday after bleak U.S. jobless claims data reinforced fears of a slower recovery from the coronavirus induced economic crisis, denting the dollar and U.S. Treasury yields.

Friday (21/8), spot gold was up 0.3% at $1,947.83 per ounce. Gold is up 0.2% so far this week, having shed 4.5% in the week to Aug. 14, its worst in five months.

U.S. gold futures rose 0.5% to $1,956.10 per ounce.

"A deterioration in U.S. labour market data, falling bond yields and continued geopolitical tensions continue to support gold," said National Australia Bank economist John Sharma.

Read Also: Record-breaking stocks take a breather, data weighs on dollar

"We see gold trading between $1,920 and $1,980 in the near term," he said, adding that factors such as rising risk sentiment and progress on the coronavirus vaccine front could dent demand.

A technology stocks-fuelled rally on Wall Street drove Asian markets higher on Friday, limiting gold's advance.

Data on Thursday showed the number of Americans filing a new claim for unemployment benefits rose unexpectedly back above the 1 million mark last week, a setback for a struggling U.S. job market crippled by the coronavirus pandemic.

This sent the dollar index and benchmark 10-year Treasury yields lower, making gold an attractive investment for holders of other currencies.

Adding to doubts over a swift U.S. economic rebound, Federal Reserve officials on Wednesday warned that a recovery faced a highly uncertain path, helping gold recover from a more than 3% slump earlier this week.

"Despite the rebound in prices, precious metals do have short-term downside risks that would continue to affect prices," Phillip Futures analysts said in a note.

Read Also: Dollar loses out, yuan soars amid doubts about U.S. economy

Meanwhile, the Trump administration declined to acknowledge any plans to meet with China over the Phase 1 trade deal.

Elsewhere, silver gained 0.6% to $27.40 per ounce and was poised for a weekly rise of about 3.8%. 

Platinum climbed 0.6% to $922.77, while palladium fell 0.5% to $2,170.53.