Gold set for worst week in six as economies look to reopenGold set for worst week in six as economies look to reopen
FILE PHOTO: The spread of the coronavirus disease (COVID-19) in Bangkok

By Brijesh Patel

(Reuters) – Gold slipped in holiday-thinned trade on Friday as optimism over economies easing coronavirus lockdowns prompted investors to book profits, keeping bullion on track for its worst week in more than a month.

Spot gold was down 0.5% at $1,672.40 per ounce by 1011 GMT. Bullion has fallen more than 3% so far this week, its biggest weekly loss since mid-March.

U.S. gold futures dropped 0.7% to $1,681.90. Most markets were closed for Labour Day in Europe and Asia.

“People are taking profits before the weekend because many countries plan to reopen their economies, which is negative for gold over the short term,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.

“However, gold’s narrative has not been changed much. We are in for a gloomy run of economic data over the next few months and the central banks will continue to ease, including the U.S. Federal Reserve, which opens up gold to go higher.”

Gold is seen as a safe haven during times of economic turmoil.

UK Prime Minister Boris Johnson promised to set out a plan next week on how Britain might start gradually returning to normal life.

Half of all U.S. states forged ahead with their strategies for easing restrictions on restaurants, retail and other businesses in hopes of reviving the virus-stricken commerce.

“The virus is far from over, but the wave of positive news had taken some air out of gold’s wings,” said Edward Moya, a senior market analyst at broker OANDA.

The pandemic, which has battered global growth, has infected more than 3.2 million people globally and killed 227,864.

Yet more dismal data out of the United States underscored the deep economic impact of the virus, with 30.3 million Americans filing for unemployment benefits since March 21, amid a record collapse in consumer spending in March.

Central banks around the world have announced massive fiscal and monetary measures to limit economic damage caused by the virus outbreak and restrictions put in place to curtail its spread.

Gold also tends to benefit from widespread stimulus measures as it’s often seen as a hedge against inflation and currency debasement.

“On the technical side, gold is now trading near the key support level of $1,675 and a clear breakdown of this threshold would be a clear negative signal, with potential space for further falls to $1,630,” ActivTrades chief analyst Carlo Alberto De Casa said in a note.

Palladium fell 2% to $1,920.65 per ounce, on track for its fifth straight weekly decline.

Platinum was down 1.8% at $757.94 per ounce, silver shed 1.2% to $14.84.

(Reporting by Brijesh Patel in Bengaluru; Editing by Susan Fenton)