(Reuters) - Gold edged lower on Thursday but was en route to its best month since 2016 on the massive amounts of stimulus from governments worldwide intended to stem the economic damage caused by the COVID-19 outbreak.
Bullion tends to benefit from widespread stimulus measures as it is often seen as a hedge against inflation and currency debasement.
“Gold has already received most of its supportive news and in my opinion that might cause a very light pull back, a little consolidation. In the short-term you might not have that additional boost to prices,” said David Meger, director of metals trading at High Ridge Futures.
Spot gold fell 0.5% to $1,703.49 per ounce at 11:30 a.m. EDT (1530 GMT). U.S. gold futures rose 0.2% to $1,717.20 per ounce.
Gold has risen more than 8% so far this month.
Data showed millions more Americans filed claims for unemployment benefits last week, suggesting layoffs were spreading to industries that were not initially directly impacted by business closures and disruptions related to the coronavirus.
“The jobless claims are clearly probably one of the most dramatic economic indicators of how we’ve been affected by the coronavirus and I don’t see those jobless claims turning around quickly once we begin to reopen,” Meger added.
On Wednesday, the Fed kept interest rates near zero and promised to expand emergency programmes as needed to help the battered economy.
Lower interest rates reduce the opportunity cost of holding non-yielding gold, which is seen as a safe investment during times of economic turmoil.
Massive stockpiling of gold by investors spooked by the outbreak offset a collapse in jewellery production to keep global demand for the metal stable in the first three months of 2020, the World Gold Council said on Thursday.
“Investors remain confident about a relatively quick solution to coronavirus, although it is now abundantly clear that central banks will be forced to print a large amount of money,” ActivTrades chief analyst Carlo Alberto De Casa said in a note.
“From a technical point of view, a clear climb above the resistance placed at $1,730-$1,735, which has already been tested twice earlier this month, will create space for further rallies in gold.”
Elsewhere, palladium climbed 1.8% to $1,970.47 per ounce, and platinum gained 0.7% to $780.35. Silver slipped 1.6% to $15.12 per ounce.
Reporting by Eileen Soreng in Bengaluru; Editing by Chris Reese