Gold set for biggest weekly gain since April on bearish economic outlookGold set for biggest weekly gain since April on bearish economic outlook
FILE PHOTO: Gold bars are displayed in the Austrian Gold and Silver Separating Plant Oegussa in Vienna

By K. Sathya Narayanan

(Reuters) – Gold rose on Friday as fears over the resurgence of coronavirus infections and a grim economic outlook by the U.S. Federal Reserve boosted demand for bullion, leading the metal towards its biggest weekly gain since early-April.

Spot gold was 0.5% higher at $1,736.26 per ounce by 1303 GMT and has jumped about 3% so far this week, heading for its its biggest gain since the week of April 10.

U.S. gold futures gained 0.5% to $1,748.20.

“One of the reasons has been the statement form the FOMC and the testimony of the (Fed Chair) Jerome Powell, painting a darker picture of the U.S. economy,” said Quantitative Commodity Research analyst Peter Fertig.

Also, “there is talk about a second wave especially after cases of new infections of the virus have risen again in some countries. A warning which many people ignored.”

Meanwhile, the dollar was on track to record its fourth week of declines, making gold cheaper for investors using other currencies.

Earlier this week, Fed policymakers projected the U.S. economy to shrink 6.5% in 2020, while data showed that Britain’s economy shrank by 20.4% in April.

“There is still significant uncertainty about how the economic recovery will play out and any disappointments could support the gold price,” Robin Bhar, an independent consultant said in a note.

Gold is considered a safe haven during times of economic uncertainty.

Elsewhere, palladium rose 1.1% to $1,943.40 per ounce, while silver declined 0.5% to $17.61.

Platinum climbed 1.4% to $822.54 an ounce, but was set for its biggest weekly fall since end-April.

(Reporting by K. Sathya Narayanan in Bengaluru, editing by Louise Heavens, Kirsten Donovan)