Gold recovers amid global economic slowdown worries

Gold prices recorded their first weekly gain in five weeks on persistent worries over global economic growth and a weekly decline in the dollar. The afternoon fixing on Friday in London was $1,834.20 an ounce, compared with $1,811.55 a week earlier. Thai selling prices were quoted at 30,100 baht per baht-weight (15.2 grammes), up 100 baht from the previous week.

A slide in US Treasury yields also supported gold on Friday, as prices improved about 1.8% from the week before.

“Bulls are touting safe-haven demand as being supportive for precious metals, while bears counter that recent rising bond yields and a still-strong US dollar remain in their camp,” said Kitco senior analyst Jim Wycoff.

“Both bulls and bears need some new fundamental news to help drive prices.”

Recession fears have grown recently and because of the volatility in equity markets, there will be more interest in gold, said Xiao Fu, head of commodities markets strategy at Bank of China International.

In the physical market, dealers were offering discounts even as retail demand remained robust because of the wedding season, while the easing of some Covid restrictions boosted hopes for a demand improvement in top consumer China.

Local gold prices were trading in India around 50,700 rupees per 10 grammes on Friday, after hitting a 3-month low of 49,572 rupees earlier.

Jewellers were replenishing inventories as retail sales were robust during the recent Akshaya Tritiya festival, said a Mumbai-based dealer.

Gold was sold in China at discounts of $2 per ounce to global benchmark spot rates, versus $6-8 a week earlier.

“We need to see lockdowns come to an end for demand to notably pick up,” said Matt Simpson, senior market analyst at City Index.

A return of demand from China after lockdowns ease could help arrest world gold price declines, but “we don’t think this demand will be strong enough on a sustained basis to turn prices around for prolonged periods”, JP Morgan Research said.