Gold Rises as Markets Focus on Economic Impact of Coronavirus Pandemic
At the start of a brand new trading week, gold prices are climbing higher as markets continue to focus on the NFP report which released on Friday and revealed increasing unemployment in the US as a result of the coronavirus pandemic. At the time of writing, GOLD is trading at a little above $1,617.
After rising steadily for 113 consecutive months, job creation in the US witnessed a contraction during the month of March, with the US economy registering a loss of 701k jobs because of the shutdown of workplaces and factories across the country. This boosted the safe haven appeal of gold as markets worry about the economic fallout from the pandemic and the rising risks of an upcoming recession not just in the US economy but also in the global economy.
Gold prices also received some support over reports that Japan’s PM Shinzo Abe is set to declare a state of emergency soon as the number of confirmed cases in Tokyo soars past the 1,000 mark. In addition, things remain tense in Britain with the death toll nearing 5,000 even as PM Boris Johnson gets hospitalized due to coronavirus.
However, gains in gold remain limited as the US dollar continues to make gains as a preferred safe haven currency despite the weak economic data from the US. The dollar shares a negative correlation with gold as a higher dollar makes it more expensive for holders of non-dollar currencies to purchase gold.
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