Gold Prices Grind Higher as Jobless Claims Keeps Havens in Demand
By Geoffrey Smith
Investing.com -- Gold prices consolidated around the $1,750 mark on Thursday, extending a recent pattern that has seen them rally on risk-friendly news and outperform on more bearish developments.
Havens were in favor again after another immense number for U.S. initial jobless claims, which fell only slightly from the previous week to 5.245 million. The U.S. economy has now lost more than 20 million jobs in a month due to the pandemic.
By 11:25 AM ET (1525 GMT) gold futures for delivery on the Comex exchange were $1,745.80 a troy ounce, up 0.3% from Wednesday’s close.
Futures prices were supported by comments from the world’s biggest miner, Newmont Goldcorp (NYSE:NEM), whose chief executive Tom Palmer told Bloomberg in an interview that he saw prices of over $2,000 an ounce as possible, enabled by the extraordinary anti-crisis measures taken by governments and central banks in recent weeks.
“The level of stimulus globally that’s going into the economy certainly underpins higher gold prices for the longer term, and I don’t think that stimulus has stopped yet,” Palmer said. “You could certainly see scenarios that have it pushing north of $2,000.”
Newmont stock has outperformed the price of gold itself this year, reflecting expectations of a smooth pass-through of higher prices to its bottom line. Barrick Gold (NYSE:GOLD) stock has done likewise, although both companies have warned of possible risks to production levels if the virus hits their workforce. Newmont pulled its guidance for 2020 three weeks ago and Barrick said on Thursday that first-quarter production was at the low end of expectations.
Barrick stock is up 45% so far this year and Newmont stock up 36%, while gold futures are up 14.4%.
Spot gold was up 0.6% at $1,724.45 an ounce, outperforming the futures contract after the U.S. Mint closed its West Point facility due to the coronavirus.
The coins produced by the Mint were already trading at premiums of up to 10% above their normal levels. In March, it sold more American Eagle coins than in any month since 2016, according to Commerzbank (DE:CBKG) analysts.
Commerzbank added that silver coins had also been in high demand, investors snapping up just under 5.5 million ounces in March.
Silver futures rose 1.2% to $15.70 an ounce, while Platinum futures were flat at $804.85. Copper futures edged 0.5% higher, despite the general risk-off tone, to $2.31 a pound.
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