Gold poised for third straight weekly fall amid hopes of economic recovery
Gold prices eased and were on track for a third consecutive weekly decline as markets pinned hopes on an economic recovery. However, a weak dollar, U.S. China trade tensions and risks of a second coronavirus wave limited the safe-haven metal's downside.
Spot gold was trading 0.3 percent down at $1,708.57 per ounce by 0710 GMT, having touched a low of $1,689.58 on Wednesday, its lowest since May 7 and has declined about 0.8 percent so far this week, which could be its biggest fall since the week ending May 1. U.S. gold futures slid 0.7 percent to $1,714.50.
Asian shares erased early losses and were poised for their biggest weekly rise in over eight years, as ECB approved a larger-than-expected expansion of its stimulus package, fuelling hopes for a global rebound.
On Thursday, the European Central Bank increased its emergency bond purchase scheme by 600 billion euros to 1.35 trillion and extended the scheme to mid-2021, surpassing market expectations for an expansion of 500 billion euros.
The ECB's move boosted the euro, further supporting appetite for riskier currencies and pushing the U.S. dollar near 3-month lows against a basket of currencies. The dollar index traded 0.2 percent down at 96.60, having touched a low of 96.44 earlier, its lowest since March 12.
Investors now await the U.S. nonfarm payrolls data for May due later in the day, which is likely to show payrolls falling by 8 million after a record 20.537 million plunge in April, while the unemployment rate is forecast to soar to 19.8 percent, a post-World War II record, from 14.7 percent in April. Markets will also eye U.S. Federal Reserve’s two-day policy meeting next week. The U.S. central bank has injected massive stimulus and slashed interest rates to near-zero to cushion the economy from the impact of coronavirus pandemic.