Gold prices rose sharply and hit a three-week high on Thursday, extending gains to a third successive session, as investors picked up the safe haven asset amid rising concerns about the economic impact of COVID-19 pandemic.
The Federal Reserve Chairman Jerome Powell’s warning that the economy could witness a prolonged recession due to the virus outbreak prompted investors to seek the yellow metal.
Powell ruled out negative interest rates, but said the Fed will continue to use all tools to their fullest until the crisis has passed and the economic recovery is well under way.
He also urged the Congress and the White House to act further to counter what is likely to be severe downturn.
Traders were also concerned about an escalation in U.S.-China tensions. They also reacted after WHO executive director Michael Ryan warned that the virus may become endemic like HIV and may never go away, and lifting coronavirus lockdown restrictions while the case count is still high could further accelerate the transmission of the virus and may force nations to impose another lockdown.
Gold prices surged higher despite a fairly strong dollar. The dollar index rose to 100.56, and was last seen at 100.50, up nearly 0.3% from previous close.
Gold futures for June ended up $24.50, or about 1.4%, at $1,740.90 an ounce.
On Wednesday, gold futures for June ended up $9.60, or 0.6%, at $1,716.40 an ounce, after gaining about 0.5% a session earlier.
In economic news, the Labor Department’s report showed a continued decline in first-time claims for U.S. unemployment benefits in the week ended May 9th, but the number of new claims still came in well above economist estimates.
The report said initial jobless claims fell to 2.981 million, a decrease of 195,000 from the previous week’s revised level of 3.176 million.
Economists had expected jobless claims to tumble to 2.5 million from the 3.169 million originally reported for the previous week.
Jobless claims have steadily decreased since reaching a record high of 6.867 million in late March, but the number of new claims has reached nearly 36.5 million since the coronavirus-induced economic shutdown.
Another report from the Labor Department showed steep drops in both import and export prices in the U.S. in the month of April. The report said import prices plunged by 2.6% in the month, after tumbling by a revised 2.4% in March.
Meanwhile, export prices showed a 3.3% decline in April, after falling by a revised 1.7% in March.