What’s happening: Gold prices closed higher on Friday to record weekly gains for the first time in three weeks.
What happened: Gold has been the favoured safe-haven asset amid the uncertainties caused by the pandemic and resulting concerns about the global economy.
The announcement of a shift in monetary policy by the US Federal Reserve led to volatile trading during the session on Thursday, and declining investor risk appetite lent support to the yellow metal during the last trading session of the week.
Why it matters: Gold prices has been on an uptrend since the covid-19 outbreak began. The yellow metal breached the $2,000 per ounce resistance level earlier this month. Although gold couldn’t hold above that level for long, it has been testing the $1970 level for a couple of weeks now.
The Federal Reserve Chairman Jerome Powell announced a shift in the central bank’s monetary policy, deciding to hold interest rates near zero till inflation rises past its 2% target.
Amid a volatile session on Thursday, the bullion moved higher immediately after the Fed’s announcement, but settled lower for the day. The decline was triggered by profit taking, as investors tried to comprehend the implications of the central bank’s move.
Gold prices regained momentum on Friday, with the rally being supported by a weakening greenback. The US dollar delivered a sharp decline on Friday, with growing strength in the yen on news of Japanese Prime Minister Shinzo Abe resigning due to worsening health conditions. The ICE Dollar Index, which measures the greenback’s performance versus major currencies, declined around 8% to 92.30 on Friday.
Gold surged on Friday with prices climbing above $1,970 during the session. December gold jumped $42.30, or 2.2%, to close at $1,974.90 an ounce on Friday, recording a weekly gain of 1.4%. This was the metal’s first weekly rise in three weeks.
December silver gained 2.2% to settle at $27.79 an ounce in the prior session, notching a weekly rise of around 4%. Meanwhile, December copper rose 1% to $3.0195 a pound, gaining 3.5% for the week.
What to watch: Investors will be keeping an eye on the US jobs report, which is due to be released later in the week. A strong jobs report will boost investor confidence in the US economy and support the greenback, lowering interest for precious metal. Gold is likely to continue last week’s positive momentum today, with gold futures trading higher by 0.2% to $1,979.00 an ounce during the Asian session.