Gold was trading higher on Thursday. After two days of gains, the metal is already trading at highs since April 14. Speculation that central banks will insert more money into the economy is causing the dollar to drop in price and is giving investors more liquidity to buy safe assets.
In this framework, the main stock markets around the world are registering significant gains. While oil is jumping 27 % on the day, the dollar index is falling. Meanwhile, gold and other metals are advancing.
Besides, the economic data published during the day has revealed the impact of the coronavirus pandemic on the world economy.
Weak PMIs and depressing unemployment data
Markit, a London–based global information provider, published its PMI indices for several advanced economies during the day. The data the company has offered is not very hopeful. It shows that the global economy is subjected to the mode of inactivity.
In the United States, the data on unemployment claims displayed massive job destruction. During the week, more than 4.4 million new requests were received for unemployment benefits.
In the past five weeks, more than 26.5 million requests for initial unemployment benefits have been reported.
Moreover, the coronavirus pandemic has affected a significant portion of the United States population. There are more than 844 thousand infected in the US, with nearly 47 thousand fatalities. The number of infected cases in the world is totaling 2.7 million. The virus has affected 185 countries and has killed 185 thousand people.
Gold consolidates close to 1,730
Gold jumped Thursday to trade at levels not seen since April 14, close to 1,740. Currently, the XAU/USD is consolidating levels close to 1,730, registering a gain of 0.85 %. The graph is becoming more and more positive, and analysts consider the level of 1,750 to be possible.
On the downside, the metal maintains short-term support at 1,700. Then the 1,675 and 1,650 are levels to consider.
Hareesh V, the Head Commodity Researcher at Geojit Financial Services, stated that gold might continue with positive momentum. Investors still place trust in the metal’s safety due to the fears of a steep global recession. There is hope that central banks’ fiscal stimulus measures can overcome the negative economic effect of the coronavirus outbreak, might also support gold. Still, he thinks that moderate physical market activities because of lockdowns may limit significant gains.
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