Gold set for best month in nearly 4-1/2 years as weak US data dents dollar

Filed on July 31, 2020
Dubai, gold, forex

(KT file photo)

US gold futures rose 1 per cent to $1,961.30.

Gold rose on Friday en route to its best month in nearly 4-1/2 years as the dollar slid further after dismal US data added to doubts about a swift recovery from the pandemic-induced economic slump, driving investors towards the safe-haven metal

Spot gold was up 0.4 per cent at $1,967.53 per ounce by 0458 GMT after snapping a nine-session winning streak on Thursday. US gold futures rose 1 per cent to $1,961.30. The precious metal is priced at Dh238.50 for 24K, Dh224.25 for 22K, Dh214 for 21K and Dh183.25 for 18K per gram in Dubai.

The US dollar fell to a two-year low and was on course for its worst month in a decade, making bullion cheaper for investors holding other currencies.

Apart from US data showing the deepest economic contraction in at least 73 years in the second quarter, and a rise in unemployment benefits, the dollar was also hurt as President Donald Trump raised the idea of delaying the Nov. 3 presidential election.

"The weak Q2 GDP also underscores the point of a weak economy, and investors seeking refuge in gold," said National Australia Bank economist John Sharma.

A deterioration in the coronavirus situation, escalation in geopolitical tensions and further declines in the dollar could push gold above the $2,000 level, he added.

Gold has risen more than 10 per cent so far this month, its biggest monthly percentage gain since February 2016, having soared to an all-time high of $1,980.57 on Tuesday.

The jump took gains for the year to nearly 30 per cent, driven by a worsening pandemic and low interest rates globally amid widespread stimulus from central banks since the metal is considered a refuge against inflation and currency debasement.
"However, further gains are reliant on investor demand, with consumer demand showing no signs of recovery," ANZ analysts said in a note.

Among other metals, silver climbed 0.3 per cent to $23.62 an ounce, on course for its best month on record - up 30 per cent, with additional support coming from hopes for a revival in industrial activity.

Platinum rose 0.1 per cent to $903.87 and palladium gained 0.3 per cent to $2,090.01.

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