Gold prices climb as investors weigh on economic outlook and interest rates

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Gold futures rose on Thursday as investors digest a labor market economic report, which highlights a growing sense of the challenges the US economy may face in recovering from the pandemic of COVID-19.
Unemployment data in the United States has shown that those claiming unemployment benefits increased by 2.98 million during the week ended May 9. The number is higher than the consensus estimates of economists polled by MarketWatch for 2.7 million, but indicates that unemployment claims peaked at a seasonally adjusted rate of 6.9 million in late March and a dropped steadily in the past month.

Gold finds support for comments from Federal Reserve Chairman Jerome Powell, who described the path for the national economy through the lethal pathogen on Wednesday as uncertain, although central bank boss seemed to reject the idea of ​​pushing key interest rates, which range from 0% to 0.25%, to levels below zero, which would support bullion prices.
“Gold saw a lot of activity on Wednesday around the appearance of Powell and even managed to hold on to some of these gains despite his insistence that negative rates are not something they envision “Wrote Craig Erlam, Senior Market Analyst at Oanda Europe.

Gold for delivery in June on Comex
GC00,
+ 1.34%

up $ 21.90, or 1.3%, to $ 1,738.30 an ounce, after rising 0.6% on Wednesday. Meanwhile July money
SIN20,
+ 2.32%

at 39.9 cents, or 2.6%, up to around $ 16.07 an ounce, after falling 0.2% in the previous session.
“US Treasury rates close to zero along the yield curve caused by unprecedented accommodative measures [Fed] US government monetary policy and rescue plans never seen before, and US government deficits, [have] set the stage for higher gold prices, “said Jeff Klearman, portfolio manager at GraniteShares, which offers the GraniteShares Gold Trust
BAR,
+ 0.87%.

The same Fed monetary policy and US government relief measures “could potentially set the stage for a resurgence of inflation. Gold is also known as an effective hedge against inflation, “he told MarketWatch.
Gold bears can take a little heart in the number of unemployed people decelerating, which could take away some of the luster from the metal. However, gold bulls are still optimistic about the outlook for the metal, as many investors view the current environment as similar to or worse than the financial crisis of 2007-08, which shook the world markets.
“If a similar pattern were to be repeated, the precious metal could reach $ 3,500 and even $ 4,000 over the next three years.” wrote Hussein Sayed, chief market strategist at FXTM, in a daily research report.
“Although history does not necessarily repeat itself, there are so many ingredients to see gold walk higher,” he said.
In other metals stocks on Comex, July copper prices
HGN20,
-0.29%

was almost stable at $ 2.347 per pound. July platinum
PLN20,
+ 0.03%

up 0.9% to $ 776.50 an ounce, but June’s palladium
PAM20,
-0.59%

was trading at $ 1,760.40 an ounce, down 1.7%.

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