Pound to dollar outlook: UBS sees GBP/USD rising to 1.40
(Adds graphic, updates prices)
* SPDR Gold holdings rise to highest since June 2013
* Interactive graphic tracking the global spread: open https://tmsnrt.rs/3aIRuz7
in an external browser
By K. Sathya Narayanan
April 14 (Reuters) - Gold prices rose to a more than
seven-year high on Tuesday on rising fears of a steeper economic
downturn and amid massive liquidity measures by global central
banks.
Spot gold XAU= gained 0.6% to $1,724.72 per ounce by 0804
GMT, having touched its highest since Nov. 2012 at $1,726.85
earlier in the session. U.S. gold futures GCcv1 rose 0.6% to
$1,772.20.
"The concerns about the economic outlook are particularly
supportive for gold. Liquidity (from the Federal Reserve)
combined with the background of lower interest rates makes gold
a much more attractive proposition," said Michael McCarthy,
chief strategist at CMC Markets.
But he warned that in the absence of new news, there could
be "modest pull backs as investors and traders reposition
themselves".
Many countries and central banks have taken fiscal and
monetary measures to prop up their economies amid the
coronavirus outbreak.
The Fed last week announced a $2.3 trillion stimulus
package, while European Union finance ministers agreed on
half-a-trillion euros worth of economic support.
The Fed stimulus aimed at injecting liquidity into the
virus-hit U.S. economy tend to weigh on the dollar, which makes
gold relatively cheaper to buy, while lower interest rates
reduce the opportunity cost of holding non-yielding bullion.
A steep economic downturn and massive rescue spending will
nearly quadruple the fiscal 2020 U.S. budget deficit to a record
$3.8 trillion, a staggering 18.7% of U.S. economic output, a
Washington-based watchdog group said on Monday. Meanwhile, the International Monetary Fund said it would
provide debt relief to 25 member countries under its Catastrophe
Containment and Relief Trust to allow them to focus more
financial resources on fighting the pandemic. On the technical front, spot gold may test a resistance at
$1,739 per ounce, a break above which could lead to a gain at
$1,767, according to Reuters technical analyst Wang Tao.
TECH/C
Reflecting appetite for bullion, holdings in SPDR Gold Trust
GLD , the world's largest gold-backed exchange-traded fund
(ETF), rose 1.6% to 1,009.70 tonnes on Monday, the highest since
June 2013. GOL/ETF
"Gold as a safe-haven has gained traction as currencies are
being devalued by massive stimulus programs. This has also
increased physical demand of gold (such as ETFs) to hedge
against the debasement of fiat currencies," said Avtar Sandu, a
senior commodities manager at Phillip Futures, in a note.
Palladium XPD= rose 1.9% to $2,231.61 per ounce. Silver
XAG= gained 0.6% to $15.54 and platinum XPT= was up 2.5% at
$766.70.
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SPDR Gold holdings jump to near 7-year peak IMAGE https://reut.rs/2K8y8XP
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