Gold up 1% in surprise return to $1700 despite stocks’ rally

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LONDON: Gold made a surprising return to the key $1,700 level on Monday as the safe-haven crowd behind the yellow metal bet that the Federal Reserve, which meets this week, will uphold stimulus support for a U.S. economy still recovering from the coronavirus.
U.S. gold futures for August delivery settled up $22.10, or 1.3%, at $1,705.10 per ounce despite stocks on Wall Street having another run-up that pushed the tech-heavy Nasdaq index to a record high.
Stocks, which typically move in the opposite direction to gold, have been on a tear since the Labor Department reported an unexpected hike of 2.5 million U.S. jobs in its May report despite the continued shutdown of many businesses last month from Covid-19. Gold futures slumped beneath $1,700 right after the release of the jobs report early Friday.
In Monday’s session, spot gold, which tracks real-time trades in bullion, rose by $13.56, or 0.8%, to $1,698.74 by 2:55 PM ET (19:55 GMT).
The dollar, another alternative trade to gold, slid by a modest 0.3%.
“Gold prices are shrugging off last week’s decline on hopes the Fed will not tap the breaks in supporting the U.S. economic recovery,” said Ed Moya, an analyst at New York’s OANDA.
“After a brutal week, gold prices are starting to show signs of life again as investors become skeptical that the U.S. equities will struggle to climb much after recapturing all their losses this year. The global economic recovery will still require further aid and gold prices should still be supported over the medium-term.”
The Fed, which begins a two-day policy meeting on Tuesday, will be closely watched for what it says in response to the unexpected jobs growth in May. The central bank, in alliance with the White House and Congress, has approved trillions of dollars so far to help the economy and businesses fight the negative effects of Covid-19.