Futures & Commodities

Gold gains on fresh virus wave fears, gloomy Fed outlook

An Argor-Heraeus SA branded two hundred and fifty gram gold bar, center, sits in this arranged photograph at Solar Capital Gold Zrt. in Budapest, Hungary.
Akos Stiller | Bloomberg | Getty Images

Gold prices gained on Friday as investors bought the safe-haven metal as fears of a fresh wave of coronavirus cases added to the gloomy economic outlook from the U.S. Federal Reserve.

Spot gold was up 0.4% to $1,734.66 per ounce and has jumped about 3% so far this week, heading for its biggest gain since the week of April 10. U.S. gold futures rose 0.2% to $1,742.80.

"Despite the tentative stock market rebound this morning, we're seeing gold prices climb because there's still steady safe-haven demand by institutional traders," said Edward Moya, senior market analyst at broker OANDA.

A recent spike in COVID-19 cases in about a dozen U.S. states partially reflects increased testing, but many of those states are also seeing rising hospitalizations.

"This is not a second wave. This is just the virus working its way throughout the country and you're going to see that derail a lot of the reopening plans across the country, which means slower economic activity - that should support gold prices," Moya added.

Major U.S. stock indexes bounced back from the previous session's rout on Thursday arising from Fed expectations of a long road to economic recovery that cast a shadow over investor bets on a quick economic rebound.

Reflecting investor appetite, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust , rose 0.5% to 1,135.05 tonnes on Thursday, its highest in over seven years.

Elsewhere, palladium rose 1.1% to $1,943.41 per ounce, while silver declined 1.1% to $17.52. Platinum edged higher by 0.2% to $812.73 an ounce but is set for its biggest weekly fall since end-March.