Gold gains as simmering US-China tensions boost demand
“Gold rebounded on Thursday as deteriorating U.S.-China relations over Beijing’s move to impose a national-security law in Hong Kong fanned concerns over quick economic recovery and drove investors towards the safe-haven metal.
Spot gold was up 0.8% at $1,722.70 per ounce, recovering from a two-week low of $1,693.22 touched in the previous session. U.S. gold futures rose 0.8% to $1,739.70.
“The tensions between U.S. and China continue to be rather on the high side. Overall, the market is a bit worried about the situation geopolitically and also economically,” said Afshin Nabavi, senior vice president at precious metals trader MKS SA.”
The extra $600 Americans receive in weekly unemployment benefits ends in July — how that could cost the U.S. more jobs
“Two-thirds of Americans are receiving more money from unemployment benefits than they did from their jobs, largely because of a supplemental $600 weekly benefit that’s part of the $2.2 trillion CARES Act.
But decreasing those benefits could cost the country even more jobs on top of the historic 40 million jobs that have already been wiped away by the coronavirus pandemic, Heidi Shierholz, an economist at the Economic Policy Institute, a left-leaning think-tank based in Washington, D.C., said.
The weekly supplemental $600 benefit is set to expire at the end of July if the U.S. Senate and President Donald Trump don’t pass the $3 trillion HEROES Act stimulus package, which would extend the $600 weekly add-on unemployment benefit into January 2021.
Many Republican lawmakers hold that the $600 weekly boost in unemployment insurance during the pandemic is a disincentive to return back to work, given that people could earn more from not working.”
Gold prices gain as risk aversion upticks late this week
“Gold and silver prices are trading moderately higher in early U.S. trading Thursday, as safe-haven demand has returned to the metals after a brief absence. Souring China-U.S. relations are back on the front burner of the market place. August gold futures were last up $10.70 an ounce at $1,737.50. July Comex silver prices were last up $0.108 at $17.86 an ounce.
Global stock markets were mixed in overnight trading, with European shares mostly higher and Asian shares mostly lower. U.S. stock indexes are also pointed toward mixed openings when the New York day session begins. There is a bit more risk aversion in the marketplace Thursday, as China’s government has ratified what is calls a national security law that ostensibly tightens mainland China’s grip on Hong Kong. The move has further angered the U.S. as relations between the two largest economies in the world continue to deteriorate. The U.S. Secretary of State on Wednesday said Hong Kong was no longer autonomous from China, implying the U.S. may revoke Hong Kong’s favorable trade status. Such would have big implications for the many major U.S. companies doing business in Hong Kong. The U.S. House of Representatives Wednesday passed a bill that would sanction China for its oppression of minority groups.”
Another 2.12 million Americans file initial jobless claims; gold remains higher
“Americans have now filed a total of 40.77 million initial claims since the week of March 21.
New weekly claims have been above 2 million every week since March 21 after the previous all-time high had been 695,000 back in October 1982, according to Labor Department figures. Traders have been closely monitoring jobless claims as a key gauge of the weakness in the economy due to lockdowns and social-distancing measures across the country to combat the spread of the COVID-19 pandemic, with many businesses temporarily closing their doors. States are now gradually reopening their economies.
The four-week moving average for new claims – normally viewed as a more reliable measure of the labor market since it smooths out week-to-week volatility – fell by 436,000 to 2.61 million.”