Gold heads for third weekly advance on recovery headwinds

Fears about the spread of Covid-19 variants and prospect of prolonged dovish monetary policy benefit bullion

FILE PHOTO: Gold bullion coins known as Krugerrands are pictured in the mint where they are manufactured in Midrand outside Johannesburg October 3, 2008. REUTERS/Siphiwe Sibeko (SOUTH AFRICA)/File Photo

Gold is heading for a third weekly advance, with the haven metal gaining on anxiety about the spread of Covid-19 variants and prospect of prolonged dovish monetary policy.

Bullion is winning back investors after a bleak June, with fears the world’s exit from the Covid-19 pandemic may be more fraught than anticipated.

Renewed virus fears are a boon for bullion because governments may have to extend monetary support to still-fragile economies.

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Demand for safe haven assets rose following a lift in US initial jobless claims.
Australia & New Zealand Banking Group

Those risks were underscored this week by US Federal Reserve minutes that highlighted continued uncertainties and a rise in US jobless claims.

China’s surprise hint that it could unleash more liquidity to the economy also added to the sense that headwinds to a global recovery remain strong.

“Commodities came under pressure as policy makers around the world flagged risk to their economies from rising cases of Covid-19 variants,” Australia & New Zealand Banking Group said.

“Demand for safe haven assets rose following a lift in US initial jobless claims.”

Updated: July 9th 2021, 10:36 AM
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