Gold Price Rises After Biggest Single-Day Decline In A Month

US gold futures inched up 0.1% to $1,705.70

Gold prices rose on Thursday after an equity rally fuelled by signs of an economic recovery from mandated shutdowns sparked the biggest daily fall since April 30 in the previous session.

Spot gold climbed 0.4 per cent to $1,703.95 per ounce by 9:37 am after a 1.7 per cent drop on Wednesday. US gold futures inched up 0.1 per cent to $1,705.70.

The market is seeing some “corrective action” after Wednesday’s steep decline, said DailyFx currency strategist Ilya Spivak.

Economic optimism from easing coronavirus-related lockdown restrictions has dampened demand for the safe-haven metal recently, sending prices lower by 1.3 per cent so far this week.

Raising hopes for an economic recovery, US private payrolls fell less than expected in May, while China’s services sector returned to growth last month for the first time since January.

“There is a recovery in risk sentiment… optimism about lockdowns ending and that the economy may be starting to stabilise a bit,” said Mr Spivak.

Asian shares rose to a two-month high on Thursday as government stimulus expectations lifted investor sentiment, curbing the appeal of gold.

Despite improving risk sentiment, gold prices hold above the key $1,700 an ounce level on simmering US-China tensions, protests in American cities and a weaker dollar.

The dollar index has fallen about 1 per ent this week, with optimism over the reopening of economies around the world reducing demand for the greenback.

Market participants now await the European Central Bank’s policy decision at 5:15 pm. The ECB is certain to give more stimulus but the only question is timing – whether later on Thursday or holding out until July.

In other metals, palladium fell 1.3 per cent to $1,923.06 per ounce, while platinum rose 0.8 per cent to $832.90. Silver eased for a third straight session, down 0.6 per cent to $17.57.

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