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Gold gains as weak U.S. jobless data stems Wall Street optimism

11/25/2020 | 10:57am EST
FILE PHOTO: The Sicpa Oasis validator system is pictured over one kilogram bar of gold at Swiss refiner Metalor in Marin

(Reuters) - Gold regained momentum on Wednesday following a sharp slide toward the $1,800 pivot in the previous sessions, as an unexpected rise in U.S. jobless claims tempered some of the COVID-19 vaccine-led optimism on Wall Street.

Spot gold rose 0.3% to $1,812.66 an ounce at 10:15 a.m. EST (1515 GMT), having hit its lowest since July 17 at $1,800.01 on Tuesday. U.S. gold futures were up 0.4% at $1,811.00.

Wall Street opened flat on signs of the slowdown in the labour market recovery, in contrast to the record runs seen in global equities as encouraging developments on COVID-19 vaccines and a smooth White House transition bolstered bets on a swifter economic rebound.

The jobless data is supportive for gold "just on notions that we've still got a very dark period ahead before we get through this pandemic," Kitco Metals senior analyst Jim Wyckoff said.

A subdued dollar also spurred gold by making it cheaper for those holding other currencies.

The dollar's slide "along with the technical support (for gold near $1,800), convinced some people to maybe stop selling and acquire some more positions," said Bart Melek, head of commodity strategies at TD Securities.

"The next six months are going to be very difficult; we're going to experience significantly below potential growth, and governments and central banks will have to significantly add to stimulus to make sure we don't get the second wave transform into a long period of economic underperformance," Melek added.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion, which has risen over 19% this year benefiting from its status as a hedge against inflation and currency debasement.

The focus next is on minutes of the U.S. Federal Reserve's last meeting, due at 1900 GMT.

Elsewhere, silver was up 0.6% at $23.39 an ounce, platinum rose 0.1% to $962.46 and palladium was down 0.5% at $2,336.69.

(Reporting by Shreyansi Singh in Bengaluru; editing by Barbara Lewis)

By Shreyansi Singh

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
GOLD -0.41% 1843.858 Delayed Quote.-2.24%
PALLADIUM -0.49% 2310 Delayed Quote.-4.79%
SILVER -1.11% 25.1429 Delayed Quote.-3.86%
THE PLATINUM GROUP PUBLIC COMPANY LIMITED 0.00% 2.64 End-of-day quote.7.32%
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