By Brijesh Patel
(Reuters) – Gold inched lower on Friday on a strong dollar, but bullion was on track for a strong weekly rise driven by fears over a global recession due to the coronavirus even as central banks continued to unleash a wave of stimulus measures.
Spot gold was down 0.2% at $1,727.90 per ounce by 1002 GMT, but was up more than 2.6% so far this week. U.S. gold futures gained 0.4% at $1,752.90.
“Gold is lower mostly due to the strength of the U.S. dollar, not because of weakness in demand. Gold is holding up well and it’s not surprising given the continuing volatility in other markets and people looking for safe-havens,” Commerzbank analyst Eugen Weinberg said.
“In euro terms, gold has risen to an all-time high, which is definitely yet another proof of the continuing safe-haven demand and decreasing trust in central bank money.”
The dollar was headed for its biggest weekly rise since early April, making gold more expensive for holders of other currencies.
European shares tumbled on fears of a severe and lasting economic hit from the pandemic after a report raised doubts about progress in developing a treatment for COVID-19.
More than 2.7 million people have been reported to be infected by the virus globally. Central banks have adopted massive monetary measures to limit the economic damage, with most countries extending lockdowns to curtail its spread.
The U.S. House of Representatives overwhelmingly approved a $484 billion coronavirus relief bill, while European Union leaders approved an immediate rescue package of about 500 billion euros.
“In this new world in which both the European Central Bank and the U.S. Federal Reserve continue to unleash new stimulus packages, dramatically increasing the liquidity of cash, combined with a lot of uncertainty, gold will remain in high demand and playing a key role in any investor’s portfolio,” ActivTrades chief analyst Carlo Alberto De Casa said in a note.
“Technically the trend remains bullish and a climb above $1,730 would open space for the price to test $1,747 again, with a good chance of a new high being recorded for this haven asset.”
Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose to a near seven-year high.
Elsewhere, palladium climbed 2.5% to $2,029.02 an ounce, but was on track to post its fourth straight weekly decline.
Platinum gained 0.8% to $761.36 per ounce, while silver eased 0.3% to $15.26.
(Reporting by Brijesh Patel in Bengaluru;Editing by Elaine Hardcastle)