For the week, gold prices are still down about 0.8 percent, on track for their biggest weekly decline since June 7. On Monday, prices fell as much as 3 percent amid a broader sell-off in the stock market, snapping a three-day losing streak.
The stock then recovered on Thursday after new US labor market data showed that the number of applications for unemployment benefits had fallen by the sharpest rate in almost a year, fueling optimism that the US Federal Reserve could achieve a safe landing with its monetary easing.
Thursday’s gains also brought gold within touching distance of its record high set last month. The precious metal has risen about 18 percent this year, largely on expectations that the U.S. Federal Reserve would soon cut interest rates.
Other factors supporting the upward trend in gold prices include increased buying by central banks and Chinese consumers, as well as safe-haven buying due to conflicts in the Middle East and Ukraine.
“Increased volatility, heightened geopolitical risks, recession concerns and expected interest rate cuts have pushed gold prices to current levels and undermined our belief in caution when buying gold,” said RBC Capital Markets analysts, including Helima Croft, in a note to Bloomberg.
“We maintain our positive view of gold as a diversifying hedge against turbulence elsewhere,” said Ole Hansen, head of commodity strategy at Saxo Bank, in a Reuters Interview.
“Over the medium term, the outlook for gold remains positive, with any declines likely to be short-lived due to underlying macroeconomic factors,” said Zain Vawda, market analyst at OANDA’s MarketPulse.
“Yesterday’s US unemployment figures eased recession concerns and pushed gold prices higher. In addition, comments from the Fed this week supported the notion that rate cuts could be imminent,” he added.
(With files from Bloomberg and Reuters)
