Blog: Gold shifts course to end higher as Europe lockdowns, Brexit worries lift haven demand for the metal – MarketWatch

Gold futures recovered early losses to finish with a modest gain Thursday, as traders favored the precious metal as a haven investment, despite a rise in the U.S. dollar, following the week’s decline in gold prices.

Gold turned higher, showing signs of “delinking” from the ICE U.S. Dollar Index DXY, Chintan Karnani, chief market analyst at Insignia Consultants, told MarketWatch. Europe’s struggle with the rise in COVID-19 cases and ongoing talks over Brexit worked to boost safe-haven demand for gold.

That outweighed earlier pressure from a rise in the dollar, which strengthened as the euro
EURUSD,
-0.02%

and British pound
GBPUSD,
-0.13%

both fell against the U.S. currencywith Europe focusing on Brexit talks and the coronavirus spread and lockdowns, said Karnani. A stronger greenback can make dollar-priced gold more expensive to overseas buyers.

In Thursday dealings, the ICE U.S. Dollar Index DXY traded up around 0.5%.

December gold 
GOLD,
-1.97%

GCZ20,
+0.12%

tacked on $1.60, or 0.08%, to settle at $1,908.90 an ounce after a 0.7% gain on Wednesday. Prices Thursday had touched an intraday low of $1,892.70, highlighting fitful trade for bullion on the week.

Silver for December delivery
SI00,
+0.70%

SIZ20,
+0.70%
,
 meanwhile, pared early losses to finished down 17 cents, or 0.7%, to $24.224, following a 1.1% gain in the previous session.

On the week so far, gold prices have lost 0.9%, while silver futures are down 3.5%, according to FactSet data.

Gold has moved in line with the dollar’s strength absent other catalysts of late but some longer-term investors believe that a resurgence of the pandemic and the belief that the viral outbreak may lead to further global fiscal stimulus has been considered a boon for bullion.

“Ultimately, gold will benefit as Europe unleashes more stimulus and as investors grow comfortable with a slight pause in aid from Washington DC,” wrote Edward Moya, senior market analyst at Oanda, in a note.

France announced a new curfew in Paris and other major cities, as U.K. also introduced restrictions in London. Meanwhile, European leaders are meeting to discuss the coronavirus pandemic as well as trade talks with the U.K. with the Brexit transition period expiring at the end of 2020.

Gold prices had initially moved higher after data Thursday revealed that the number of Americans who applied for jobless benefits in the week ended Oct. 10 rose by 53,000 to 898,000–the highest level in seven weeks.

“The significant increase in the unemployment claims is another warning sign for the U.S. lawmakers to get their act together,” said Naeem Aslam, chief market analyst at AvaTrade. “The sad fact is that this situation is only going to get worse if we do not get any help in terms of another stimulus package.”

“Traders have become a lot [more] risk averse on the back of this data point,” and that led to move up in gold prices immediately after the jobless claims data, he said in a market update.

Karnani, however, said he expects higher gold investment demand from Europe and the U.K. “Europe investment demand, plus Asian physical demand, equal a bullish gold price trend for [Friday] and next week,” he said. 

Among other metals traded on Comex, December copper
HGZ20,
-0.08%

climbed by nearly 1.2% to $3.0855 a pound. January platinum
PLF21,
+0.54%

fell 0.2% to $861.30 an ounce, while December palladium
PAZ20,
-0.02%

added 0.03% to $2,367.10 an ounce.

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