Gold eyes best month in four years as weak U.S. data slams dollar

Spot gold was up 0.4% at $1,966.31 per ounce

  
Image used for illustrator purpose Gold bars and coins are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, August 14, 2019.

Image used for illustrator purpose Gold bars and coins are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, August 14, 2019.

REUTERS/Michael Dalder

Gold rose on Friday en route to its best month in more than four years as the dollar slid further after dismal U.S. data added to doubts about a swift recovery from the pandemic-induced economic slump, driving investors towards the safe-haven metal.

Spot gold was up 0.4% at $1,966.31 per ounce by 0251 GMT after snapping a nine-session winning streak in the previous session. U.S. gold futures rose 1% to $1,959.70.

The U.S. dollar fell to a two-year low and was on course for its worst month in a decade, making bullion cheaper for investors holding other currencies.

Apart from U.S. data showing the deepest economic contraction in at least 73 years in the second quarter, and a rise in unemployment benefits, the dollar was also hurt as President Donald Trump raised the idea of delaying the Nov. 3 presidential election.

"The weak Q2 GDP also underscores the point of a weak economy, and investors seeking refuge in gold," said National Australia Bank economist John Sharma.

A deterioration in the coronavirus situation, escalation in geopolitical tensions and further declines in the dollar could push gold above the $2,000 level, he added.

Gold has risen more than 10% so far this month, its biggest monthly percentage gain since February 2016, having soared to an all-time high of $1,980.57 on Tuesday.

The jump took its gains for the year to nearly 30%, driven by a worsening pandemic and low interest rates globally amid widespread stimulus from central banks since the metal is considered a refuge against inflation and currency debasement.

"However, further gains are reliant on investor demand, with consumer demand showing no signs of recovery," ANZ analysts said in a note.

Among other metals, silver was up 0.1% at $23.56 an ounce, on course for its best month on record -- at 30%, with additional support coming from hopes for a revival in industrial activity.

Platinum eased 0.2% to $900.82 and palladium dropped 0.5% to $2,073.54.

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu) ((Brijesh.Patel1@thomsonreuters.com; Within U.S. +1 651 848 5832, Outside U.S. +91 8067493865; Reuters Messaging: Brijesh.Patel1.thomsonreuters.com@reuters.net))

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