Commodities

Spot Gold Peaks 7-year High as U.S. Data Worsens

The rapid depress in U.S. data remains consistent, thus encouraging investors to continuously hedge against it with the yellow metal, gold.

On Friday, gold hit the key per-ounce mark level of $1,750, sending the prices of bullion to 7-year highs. Also, U.S. gold futures hit its one-month high due to more dismal data on United States industrial production and retail sales. The coronavirus lock down triggered the sudden drop in retail sales, as well as factory output.

The United States data for April was terrible, thus increasing the fears of total economic damage. Also, the escalating tension between China and United States may result in gold hitting further highs. For this week, futures and spot gold gained almost 3%. However, the U.S. data which was released on Friday reflected a 16.4% fall in retail sales and 11.4% industrial production fall in April. This is the worst performance so far thanks to the crippling effect the COVID-19 pandemic has had on the U.S. economy.

Despite almost all 50 American states reopening their economies somehow within the past two weeks, some economists believe a sharp recession would occur by the second quarter. This will mean more depressing data ahead.

According to Larry Kudlow, White House Economic Adviser, on Friday, despite the reopening of many businesses, the U.S. economy still remained in a free fall state.

President Trump, in an interview with Fox Business, expressed his disappointment in China’s inability to contain the virus, stating that it had affected his deal with Beijing.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Trader Buzz). I have no business relationship with any company whose stock is mentioned in this article.

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