Gold price set for biggest weekly gain since April on bearish economic outlook

London (June 12) - Gold rose on Friday as fears regarding the resurgence of coronavirus infections and grim economic outlook by the U.S. Federal Reserve boosted demand for bullion, leading the metal towards its biggest weekly gain since early-April.

Spot gold gained 0.3% to $1,732.91 per ounce by 1008 GMT, and has jumped about 2.8% so far this week, which could be its biggest gain since the week of April 10. U.S. gold futures eased 0.1% to $1,738.60. "One of the reasons has been the statement form the FOMC and the testimony of the (Fed Chair) Jerome Powell, painting a darker picture of the U.S. economy," said Quantitative Commodity Research analyst Peter Fertig. Also, "there is talk about second wave especially after cases of new infections of the virus have risen again in some countries.

A warning which many people ignored." A slump in global shares extended to its fourth day as worries that new virus infections could stunt the pace of the economic recovery, while the dollar was on track to record its fourth week of declines.

Earlier this week, Fed policymakers projected the U.S. economy to shrink 6.5% in 2020. Data showed that Britain's economy shrank by 20.4% in April due to the virus-induced lockdown. "A lot of data is telling us how bad things are now," OANDA analyst Craig Erlam said, adding, the markets have priced in the short term impact while they are still unclear about the longer term consequences.

Gold is used as a safe haven during times of economic uncertainty. Elsewhere, palladium rose 1.4% to $1,947.37 per ounce, while silver declined 0.8% to $17.57. Platinum climbed 1.4% to $822.22, but was set for its biggest weekly fall since end-April.

Reuters

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