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- The main equity indices in the US USA They record heavy losses.
- Risk aversion helps gold find demand on Friday.
- The US Dollar Index rebounds above 99, losing more than 1% this week.
The XAU / USD pair fell to its lowest level since April 10 at $ 1,670 on Friday, but it organized a rally during the US session as risk flows gave a boost to the safe haven precious metal. At time of writing, the pair rose 0.5% on the day to $ 1,695. Despite this latest recovery, the pair remains on track to close the week nearly $ 30 lower.
Gold capitalizes the flight to safety
Data released by IHS Markit and the Institute for Supply Management (ISM) on Friday revealed that business activity in the U.S. manufacturing sector contracted sharply in April. Reflecting sour market sentiment, major Wall Street indices started the day in negative territory and continued to push down. At the moment, both the S&P 500 and Nasdaq Composite indices have fallen more than 3% daily.
On the other hand, the US Dollar Index, which fell to a 16-day low 98.78 earlier in the day, erased its losses and was last seen posting small daily gains at 99.05. However, the index continues to lose more than 1% weekly.
In a recently released report, “We continue to await the attractiveness of precious metals to the company as capital seeks refuge from negative real rates, but components of the market structure remain worrisome,” analysts at TD Securities said. “We suspect that we are in the early stages of a multi-year bull market and that, when the dust stabilizes, investment demand will continue to flow into the yellow metal: the balance of risks continues to rise for gold.”
