Category Commodities

Gold glitters as recession fears boost safe haven appeal

Gold prices surge on recession fears and bets of Fed pause; yellow metal heads for best weekly gain since early October.
Berto Tordecilla

Berto Tordecilla

Gold is having a glittering run on Friday and is headed for a robust weekly performance as feeble U.S. economic data has intensified bets that the Federal Reserve will stop hiking interest rates.

The precious metal was on track for its finest week since early October and was once again trading near the $2,000 an ounce threshold after dropping acutely over the past week.

Spot gold climbed 0.48% to $1,990.80 per ounce by 09:30 GMT.

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Gold prices were poised to surge between 2.5% and 3% this week, as weaker-than-foreseen U.S. inflation statistics fueled expectations for a clear-cut Fed pause.

The lustrous metal also enticed some safe-haven demand, as disappointing economic prints from Japan and the eurozone exacerbated fears over an imminent global recession.

But the main catalyst propelling gold came on Thursday after figures showed that U.S. jobless claims rose more than anticipated for a fourth straight week, indicating further cooling in the labor market.

Gold prices jumped over 1% following the data, given that a cooling job market and softer inflation are the two pivotal factors for the Fed to ponder halting its rate hike cycle. The dollar and Treasury yields sank after the report.

But even with a Fed pause, the central bank has repeatedly signalled it will sustain rate hikes for longer – a situation that bodes poorly for gold, given higher rates increase the opportunity cost of investing in the non-yielding bullion.

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