Spot Gold Recovers Some Ground As Slowdown Fears Persist Amid COVID-19

Gold rose on Friday, having declined over 1 per cent in the previous session, as persistent concerns over the pandemic-led economic slump boosted the metal's appeal, although gains were restricted by a jump in US Treasury yields. Spot gold was up 0.4 per cent at $1,936.64 per ounce by 0316 GMT (8:46 am in India). US gold futures rose 0.6 per cent to $1,943.20 per ounce.

"Realistically, we are probably a year or two away from the economy really recovering again," said Stephen Innes, chief market strategist at financial services firm AxiCorp.

"We are going to have lower interest rates for lot longer and the changes with the amount of stimulus we are getting behind the economy right now inflation could start to pick-up, which should help gold."

Rising coronavirus cases has cast a shadow on hopes of quick economic recovery and has prompted central banks to reduce interest rates and loosen their monetary stance, helping gold prices climb 28 per cent so far this year.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion, which is also seen as a hedge against inflation and the fear of currency debasement.

Data on Thursday showed the number of Americans filing new claims for unemployment benefits hovered around 1 million last week, suggesting the labor market recovery was stalling as the pandemic drags on.

"We believe gold prices remain positioned to the upside, respecting the underlying long-term uptrend as concerns over the global economy remain over the coming months, supporting safe haven assets including gold," Fitch Solutions said in a note.

Meanwhile, the Federal Reserve's aggressive new strategy to lift employment and increased tolerance for higher inflation pushed US bond yields higher, limiting gold's advance.

Elsewhere, silver gained 0.5 per cent to $27.21 per ounce and was on track for second consecutive weekly rise, up 1.9 per cent. Platinum rose 0.3 per cent to $931.03, while palladium climbed 0.6 per cent to $2,174.63.