29 June 2020

Gold Shines for Third Successive Week on Covid Woes

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News shaping
the markets today

     

What’s happening: Gold futures closed higher on Friday, recording gains for the third consecutive week.

What happened: A resurgence in covid-19 infections in several parts of the world has raised concerns over another round of lockdowns to avert the spread of the pandemic, lifting demand for safe-haven options and boosting gold trading.

Gold prices surged to their highest level since October 4, 2012 on Tuesday due to US-China trade tensions, weakness in the greenback and rising coronavirus cases denting the global economic outlook. Although gold prices eased subsequently, the yellow metal still recorded weekly gains.

Why it matters: The US witnessed a record single-day spike of around 40,000 coronavirus cases on Thursday, exceeding the previous record of 36,188 cases on April 24, according to data compiled by Johns Hopkins University.

Texas, Florida, California and Arizona recorded a massive rise in their daily cases, which forced Texas Governor Abbot to announce a rollback of some reopening measures on Friday. California also reversed its reopening efforts, ordering some bars to shut down again on Sunday.

After rising to an eight-year high, gold trading eased on Wednesday and Thursday due to some gains in the US dollar. Despite these gains, the greenback ended the week lower. Widespread monetary stimulus packages boosted risk taking, weakening demand for safe-haven options.

August gold gained 0.6% to end at $1,780.30 an ounce on Friday, after falling to an intraday low of $1,754. For the week, gold added 1.6%, representing the third successive weekly gains.

July silver rose 0.8% to settle at $18.035 an ounce, while September silver rose around 0.7% to $18.168 an ounce.

What to watch: With the coronavirus cases rising again around the world and death toll from the virus climbing to half a million people globally on Sunday, hopes of a strong rebound in the global economy have faded over the past month. Gold trading is expected to continue to be supported by investors increasing safe-haven options in their portfolio. Gold futures traded higher by 0.2% to $1,783.00 an ounce during the Asian session this morning.

The Markets Today

     

European stocks will be in focus today, ahead of various economic reports scheduled for release later in the day.

Context: European markets ended mostly lower on Friday, as investors worried about rising covid-19 infections in the US.

Details: European markets surged in early trading on Friday, but gave back all gains on news of Texas announcing plans to pause its reopening efforts after another record surge in daily new cases.

Restrictions were also re-imposed in some other parts of the world, with western Germany, Australia’s Victoria state and Beijing enforcing localised restrictions.

After rising over 1% previously in the session, the pan-European Stoxx 600 declined 0.4% on Friday, with most sectors closing in negative territory.

The German DAX 30 index dropped 0.7% on Friday, while French CAC 40 slipped 0.2%. London’s FTSE 100 bucked the trend, settling higher by 0.2% in the previous session.

Shares of Wirecard plunged around 64% on Friday with the German company filing for insolvency as €1.9 billion of cash went missing on its balance sheet.

What to watch: Investors await a basket of economic reports from the Eurozone, including business climate indicator, consumer confidence, economic sentiment indicator, industrial sentiment, services sentiment and consumer confidence price trends.

The consumer confidence in the Eurozone is expected to rise to -14.7 in June, versus a reading of -18.8 in May. The economic sentiment indicator is likely to increase to 80 in June versus a previous reading of 67.5. Analysts expect industrial sentiment and services sentiment to climb to -20.5 and -27, respectively, in June.

Markets will also continue to focus on the coronavirus numbers, with total cases around the world surging past the 10 million mark.

Other Markets: US indices trading closed lower on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 up down 2.84%, 2.42% and 2.59%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

Switzerland’s current account, UK’s mortgage approvals, mortgage lending and consumer credit, UAE’s loan growth, Spain's industrial confidence and consumer prices, Germany’s inflation rate, Canada’s value of building permits, producer prices and raw materials prices, Saudi Arabia’s bank lending growth and money supply M3 and the US pending home sales and Dallas Fed manufacturing index.

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