Gold futures edged higher Friday, on track for a weekly gain as investors focus on global COVID-19 hot spots and their potential to derail the global economic recovery from the pandemic.
Gold for June delivery GC00, -0.07% GCM21, -0.06% rose $10.30, or 0.6%, to $1,792.30 an ounce on Comex, while May silver SIK21, 0.08% was up 13.5 cents, or 0.5%, to $26.315 an ounce. Gold was on track for a 0.7% weekly rise, while silver was up 0.8%.
Surging COVID cases in India and Japan in particular were blamed by analysts for denting expectations for a global economic recovery, pulling down Treasury yields and aiding non-yielding assets such as gold.
For a renewed push toward $1,800 an ounce, however, the market would need to see a trend reversal in gold exchange-traded fund flows, of which there are some signs, said Carsten Fritsch, analyst at Commerzbank, in a note.
He noted that momentum in ETF outflows has already slowed, with daily average outflows in April running at 1.5 tons, compared to almost 6 tons in March.
“We expect ETF inflows and a rising gold price again in the second half of the year.,” he wrote.
“After all, the environment for gold should brighten noticeably. As the Fed will stick to its ultra-loose monetary policy for a long time, bond yields and the US dollar should ease from midyear. Thus, headwinds will turn into tailwinds,” Fritsch said.
Other arguments for a higher gold price include negative real interest rates, record high government debt, and rapidly rising money supplies, he said, with Commerzbank looking for gold to rise to $2,000 an ounce by the end of the year.