Gold rebounds from 1-week trough amid stimulus hopes, economic recovery concerns

Gold prices rose, reversing some of its previous session losses as downbeat U.S. jobs data cast a shadow over the economic outlook, and major central banks vowed to roll out further stimulus if required to revive their coronavirus-battered economies.

Spot gold was trading 0.5 percent higher at $1,952.99 per ounce by 0730 GMT, having hit a high of $1973.78 on Wednesday, its highest since September 2. The safe-haven metal fell to a 1-week low in the previous session but has gained 0.6 percent so far this week. U.S. gold futures were 0.5 percent higher at $1,960.10.

The number of Americans filing new claims for unemployment benefits fell less than expected last week, with nearly 30 million people on unemployment benefits at the end of August, indicating the labour market recovery losing steam amid fading fiscal stimulus.

The U.S. Labor Department report showed initial claims for state unemployment benefits fell 33,000 to a seasonally adjusted 860,000 for the week ended Sept. 12, while data for the prior week was revised to show 9,000 more applications received than previously reported.

U.S. Housing starts dropped 5.1 percent to a seasonally adjusted annual rate of 1.416 million units in August, while a separate report from the Philadelphia Fed showed factory activity in the mid-Atlantic region moderating in September.

The Federal Reserve on Wednesday pledged to keep interest rates near zero for a long time and said it expected the U.S. economy to shrink by far less than previously forecast in 2020.

On Thursday, the Bank of England at the end of its policy meeting stated that it was considering negative interest rates amid rising COVID-19 cases, higher unemployment and a possible new Brexit shock, while the Bank of Japan signalled readiness to ramp up stimulus.

The dollar index slumped as a batch of weak U.S. data and overall uncertainty about the economic outlook, backed the Federal Reserve’s concern about the pace of recovery. The greenback against a basket of currencies traded 0.1 percent down at 92.85, having touched a high of 93.59 on Thursday, its highest since September 9. The U.S. Treasury yields declined, with the benchmark 10-year note yield trading at 0.682 percent.