Gold prices hit their highest in more than three weeks on Friday as Sino-U.S. relations took a turn for the worse and investors fretted that the economy would take longer than expected to recover from a coronavirus-induced slump.
Spot gold gained 0.4% to $1,735.67 U.S. per ounce overnight Friday, having earlier touched its highest since April 23 at $1,737.50. U.S. gold futures rose 0.3% to $1,746.20.
It is becoming increasingly apparent that a snap-back or a V-shaped economic recovery is very unlikely, McCarthy said, adding that this meant interest rates would stay low for longer, enhancing bullion’s appeal.
Non-yielding bullion tends to gain in a low-interest environment and when economic uncertainties are on the rise.
An already dismal near-term U.S. economic outlook has darkened further, according to economic surveys. While a recovery is still forecast in the second half of the year, it won’t come close to regaining the ground it lost this year.
British manufacturers also think they will take longer to recover from the economic impact of COVID-19 than just a couple of weeks ago, according to an industry survey.
Gold has gained about 2% so far this week, poised for its biggest weekly gain in three, supported by signs of prolonged economic weakness and as tensions between the United States and China flared up.
Among other precious metals, palladium gained 0.3% to $1,840.86 U.S. an ounce, but was on track to post its seventh straight weekly drop.
Platinum rose 0.4% to $770.88 U.S. per ounce. Silver jumped 2.5% to $16.26 U.S. an ounce and was set to mark its biggest weekly gain in five.