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Gold futures gained ground Thursday as another large jump in U.S. weekly first-time jobless claims set prices on track for their biggest one-day gain in over a week.
The big U.S. data point this week will not be Friday’s monthly U.S. employment report, which is usually the most important data point of the month, said Jim Wyckoff, senior analyst at Kitco.com. Instead, the most important is Thursday’s weekly jobless claims report,” he said in a daily note.
Data Thursday showed the number of first-time jobless claims rose by 6.6 million. Prior to the coronavirus crisis, the largest-ever rise in first-time claims was less than 700,000.
“The weekly claims report further confirms U.S. economy has been severely crippled by the coronavirus outbreak,” said Wyckoff.
The U.S. Labor Department payrolls and unemployment report is due to be published Friday but will likely not reflect the surge in unemployment in March as most of the data was collected in the first half of the month before many of the business shutdowns occurred to combat the coronavirus epidemic.
The news boosted haven demand for gold, sending the June futures contract GCM20, +2.40% on Comex up by $39, or 2.5%, to $1,630.40 an ounce. A gain around that level for the most-active contract would be the largest since March 24, according to FactSet data. May silver SIK20, +4.12% advanced 61.1 cents, or 4.4%, to $14.595 an ounce.
“Ordinarily, a firmer U.S. dollar would hold back the gold market as the metal is traded in dollars, but that hasn’t been the case in the past two days,” said David Madden, market analyst at CMC Markets UK, in a market update. On Thursday, the ICE U.S. Dollar Index DXY, +0.43% added 0.5%.
“Gold has been broadly pushing higher since the awful jobless claims report from the U.S., so it appears that dealers are buying up the asset in the face of a deteriorating economic backdrop,” said Madden.
While gold found haven appeal on Thursday, the metal has seen a mixed performance as the COVID-19 pandemic takes a toll on global economic growth and sends shockwaves through financial markets.
“There are no clear directional signals in this phase as gold is facing a mixed set of fundamentals. Investors are worried by the possibility that central banks will reduce their purchases, while also jewelry and industrial demand could decline,” said Carlo Alberto De Casa, chief analyst at ActivTrades, in a note ahead of Thursday’s U.S. economic data.
“They are unsure that investment demand will grow enough to offset this loss, De Casa said, but added that the “huge liquidity input” that central banks are preparing doesn’t appear fully priced in and “could be a supportive element for the bullion price in the next few months.”
Among other metals, May copper HGK20, +1.79% tacked on 1.8% to $2.213 a pound. July platinum PLN20, +1.14% rose 1.2% to $726.50 an ounce, but June palladium PAM20, -0.79% shed 0.7% to $2,124.90 an ounce.
