By Gina Lee
Investing.com – Gold prices rose in Asia on Tuesday as the precious metal continued its gains from the last session as the COVID-19 pandemic continues to hit economies worldwide.
Gold futures reached their highest levels on Monday and were up by 0.35% at $1,767.6 by 9:25 PM ET (2:25 AM GMT) as investors flocked to the yellow metal with worsening economic news. The U.S. announced on Thursday that 6.6 million people claimed unemployment against a forecast of 5.25 million prepared by Investing.com.
Over 16 million Americans have claimed unemployment since March 21 as companies entered a difficult earnings season.
“U.S. equities are having large fluctuations and people that can’t stomach these kinds of moves are continuing to pile into gold,” Phil Streible, chief market strategist at Blue Line Futures, told CNBC. “I still think inflation coming down the road is the biggest reason gold will have an underlying bid.”
On the back of the record number of unemployment claims, the U.S. Federal Reserve also announced a broad, $2.3 trillion stimulus package on Thursday.
The economic woes unleashed by the pandemic is positive for gold as it acts as a safe haven amidst uncertainties in the equities markets.
UBS analysts said that COVID-19′s deflationary effect has been a headwind for gold in a note.
“But this trend should reverse in 2H20 as policy responses by governments and central banks gather traction. Led by Fed easing, we now expect real U.S. interest rates to dip deeper into negative territory and perhaps even test the post-GFC (global financial crisis) lows,” they added.