By Geoffrey Smith
Investing.com -- Gold prices rose to their highest in over two weeks after new data showed that over a quarter of the U.S. has become unemployed since the Covid-19 pandemic struck.
By 11:25 AM ET (1525 GMT), gold futures for delivery on the Comex exchange were up 1.4% at $1,740.20 a troy ounce, having earlier hit a two-week high of $1,746.25. Spot gold was up 0.9% at $1,731.07 an ounce.
Silver futures were up 2.4% at $16.05, while platinum futures were up 0.3% at $772.30 an ounce.
Having drifted gently downwards in a pennant formation over the last week, the yellow metal appeared to have broken cleanly through resistance around $1,730.
The move was made possible by U.S. initial jobless claims data for last week in the U.S., which totaled 2.98 million. That was down from over 3 million the week before but well above forecasts for a number around 2.5 million.
The data helped reinforce expectations if not of negative interest rates next year, then at least of a prolonged period of economic weakness that will require further support from both the government and the Federal Reserve.
Nor is the situation any better in Europe, where expectations have grown in recent days that U.K. interest rates will go below zero after new Governor Andrew Bailey refused to rule out the possibility in comments earlier in the week. Meanwhile, the European Central Bank has shrugged off any suggestion that it will be frightened off increasing its asset purchases by the German Constitutional Court’s ruling last week that cast doubt on its ability to buy bonds.
Analysts at ABN Amro said in a note to clients on Thursday that they expect a double-dip recession for the euro zone, and a meaningful recovery only in the spring of 2021.
“The risks of a sustained period of modest deflation are now significant,” analysts led by Nick Kounis wrote. "As such, large-scale net asset purchases are likely to be part of the eurozone landscape for the foreseeable future.”
ABN also expects the Bank of England to increase its quantitative easing program by 100 billion pounds at its next policy meeting in June.