By Barani Krishnan
Investing.com - The stream of depressing U.S. data isn’t slowing. Neither is investors’ reinforced desire to hedge against it with gold.
The yellow metal pierced the key $1,750-per-ounce mark on Friday, sending bullion prices to 7-½ year highs and U.S. gold futures to a one-month peak after more dismal data on U.S. retail sales and industrial production.
“Gold continues to rise as grim milestones are reached with U.S. economic data,” said Ed Moya, analyst at New York-based online trading platform OANDA.
“U.S. data for the month of April was disastrous, adding to fears of permanent damage to the economy. Along with escalating tensions between the U.S. and China, (these) should continue to support higher gold prices.”
Spot gold, which tracks real-time trades in bullion, rose $13.62, or 0.8%, to $1,743.62 by 2:20 PM ET (18:20 GMT). It earlier surged to $1,751.54, its highest since December 2012.
U.S. gold futures for June settled up 24.50, or 0.9%, at $1,756.30. It scaled $1,760.55 at the session highs, marking a peak since April 14.
For the week, both spot gold and futures gained nearly 3%.
U.S. data issued on Friday showed U.S. retail sales falling 16.4% and industrial production down 11.4% in April, the worst monthly performance ever for the two gauges, as the Covid-19 pandemic crippled the U.S. economy.
The U.S. economy shrank 4.8% in the first three months of 2020 for the sharpest economic decline since the Great Recession of 2007 to 2009. While nearly all 50 states in America have reopened their economies in one way or another over the past two weeks, economists warn of a sharp recession by the second quarter, meaning more bleak data to come.
White House Economic Adviser Larry Kudlow said on Friday the economy was still in a freefall mode despite many businesses having resumed operations since lockdowns imposed over the Covid-19.
“We haven’t turned the corner yet on unemployment claims,” Kudlow told a Fox Business interview. “I was looking through the continuing claims and they look a little lighter or lower than people might have thought. But they've been in a pretty steady downtrend for the past six or seven weeks and they're still bad numbers and they're still heartbreak numbers, hardship numbers.”
“The pandemic’s contraction and Q2 is going to be very difficult,” he added, referring to the 36 million jobs lost over the past two months.
Gold also got a shot in the arm from worsening U.S.-China relations.
In a separate interview with Fox Business broadcast on Thursday, President Donald Trump said he was very disappointed with China's failure to contain the disease and that the pandemic had cast a pall over his January trade deal with Beijing, which he has previously hailed as a major achievement.
Trump, who seeks reelection in November and has been sharply criticized for his own handling of the pandemic, said he has no interest in speaking to his Chinese counterpart Xi Jinping to fix ties, suggesting that he might even sever relations with the world's second-largest economy.