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Gold faces weekly decline on signs of growth picking up

Swati Verma/Bengaluru
Filed on May 22, 2020
Spot gold was up 0.2 per cent at $1,727.75 per ounce by 0524 GMT, having dropped 1.4 per cent on Thursday. - Reuters

Gold has held ground above the key $1,700 per ounce level, building impetus to reach its 2011 peak in the coming quarters.

Gold gained on Friday as an escalation in US-China tensions underpinned bullion's safe-haven appeal, although positive economic indicators after some countries eased lockdowns set up the precious metal for a weekly drop.

Spot gold was up 0.2 per cent at $1,727.75 per ounce by 0524 GMT, having dropped 1.4 per cent on Thursday. US gold futures rose 0.4 per cent to $1,729.40. Bullion had rallied to its highest since October 2012 on Monday, but has since lost ground and is now heading for a 0.7 per cent weekly decline.

"The fundamentals are still supportive for gold. But, there was a slight improvement in the manufacturing activity in Europe and the US, the PMI data last night was slightly better," said Avtar Sandu, a senior commodities manager at Phillip Futures.

The euro zone economy's contraction eased in May, the Purchasing Manager Index (PMI) survey showed. Germany's private sector recession also improved on loosening of lockdown curbs put in place to prevent the virus spread.

However, US-China frictions dampened risk appetite, underpinning bullion and offsetting pressure on the metal's prices from the slightly better data.

Asian shares fell after Beijing's plan to impose a new national security legislation on Hong Kong drew a warning from US President Donald Trump.

Gold has held ground above the key $1,700 per ounce level, building impetus to reach its 2011 peak in the coming quarters, Fitch Solutions said in a note.

The lower-for-longer interest rates with quantitative easing in full swing, macro and geopolitical uncertainty and strong investor flows should continue to support gold prices on a 6-12 month horizon, Fitch added.

Palladium gained 0.1per cent to $2,015.76 per ounce, and was looking to post its best week since end-March. Platinum fell 0.6per cent to $827.83 and silver slid 1.4 per cent to $16.82. - Reuters 


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