Money News

Gold eases, but eyes weekly gain on economic recovery worries

(Reuters) - Gold edged lower on Friday on a lack of any further stimulus from the European Central Bank and the U.S. government, but the safe-haven commodity was set to end the week higher on concerns over an economic recovery.

FILE PHOTO: A gold bar is pictured on display at Korea Gold Exchange in Seoul, South Korea, August 6, 2020. REUTERS/Kim Hong-Ji/File photo

Spot gold eased 0.3% at $1,948.80 per ounce by 10:56 a.m. EDT (1456 GMT), prices were up 0.8% so far this week. U.S. gold futures fell 0.4% to $1,957.10.

“There was a bit of disappointment with the ECB, because of expectations that we’re going to see more stimulus, however despite that gold is holding up pretty nicely,” Edward Moya, senior market analyst at broker OANDA, said.

ECB President Christine Lagarde on Thursday took a modestly upbeat view on Europe’s recovery and refrained from signalling that the bank would expand stimulus.

Meanwhile, the U.S. Senate blocked a Republican bill that would have provided around $300 billion in new coronavirus aid.

“We are transitioning into a post-covid type of environment, that means we’re not going to be pumping out the same stimulus, that signals to the market that things are going to be a little different going forward,” said Daniel Pavilonis, senior market strategist at RJO Futures.

However, Pavilonis added, gold can touch $2,300 an ounce by the year-end on uncertainty surrounding equity markets, economy and the upcoming U.S. elections.

Gold is perceived as a hedge against inflation and currency debasement.

Investors are now eyeing U.S. Federal Reserve’s next policy meeting due on Sept. 15-16.

“The labor market recovery has completely stalled, the congress has delivered zero extra dollars since the last Fed meeting and there’s going to be a lot more pressure for the Fed to maintain a accommodative stance,” Moya added.

Elsewhere, silver rose 0.1% to $26.93 per ounce, while palladium rose 1.2% to $2,320.67.

Platinum climbed 1.2% to $937.06 and was heading for its best week since the week ending Aug. 7, up 4.6%.

Reporting by Sumita Layek in Bengaluru; Editing by Marguerita Choy