Gold fears of prolonged recession and unemployment data
Gold was trading lower on Thursday because of worries that the impact of COVID-19 on the US economy will be delayed.
This fear comes after Federal Reserve chief Jerome Powell has expressed a rather grim view of what the American central bank expects from the economy after the virus.
According to Powell, the economic response has been both timely and appropriate. However, it may not be the final chapter, as the path ahead is highly uncertain and subject to significant adverse risks.
Powell also mentioned his fears about the reopening of several states of the country. On the other hand, the news about a rebound of the virus in Asian countries after the relaxation of social distancing policies has been a matter of concern.
Unemployment numbers in the United States continue to show ugly results. The Department of Labor reported that during the week of May 8, nearly 3 million people applied for unemployment benefits. The number was much higher than the 2.5 million expected by the market.
COVID-19: 4.4 million cases; 298 thousand deaths
According to the latest update of the COVID-19 Dashboard from the Center for Systems Science and Engineering at Johns Hopkins University, the number of confirmed cases of coronavirus is reaching 4.4 million people in 199 countries around the world.
As for fatalities, the number of patients who have succumbed to the virus is close to 298 people.
The United States remains the most affected country, with almost 1.4 million cases and more than 84 thousand deaths. However, President Trump is pushing for the reopening of state economies regardless of expert advice for taking things slow and responding to clear instructions.
Interestingly, the three most affected countries in the world have populist governments. The United States represents 30% of those affected worldwide. Russia has more than 252 thousand confirmed cases, and the United Kingdom has already reported almost 231 thousand infected.
Gold tests the 1,725
After posting gains on Tuesday and Wednesday, gold traded sideways on Thursday. During the day’s session, the XAU / USD had been moving in a narrow range, between 1,710 and 1,720. The metal settled at $ 1.715, representing a decrease of 0.10% on the day. The chart remains mixed as the asset is in a mode of consolidation.
Analysts think that if the metal cracks under the weight of heightened selling pressure, XAU/USD may encounter some downside resistance between 1671.81 and 1671.84 before turning lower. If that area also surrenders to the force of sellers, the next floor to clear might be at 1641.20.
