More Trouble for US Economy as USD Plummets and Gold Rises

Following the release of the US jobless claims numbers, gold has pushed higher.

So far, it’s been a simple case of cause and effect. As the global pandemic continues to spread, President Trump faces many tough decisions that will all to a degree shut down parts of the economy.

The lockdown of the US economy has, in turn, caused many people to lose their jobs and forced the unemployment rate to spike up drastically.

We all saw this coming. However, with the release of the joblessness claims, we are finally starting to see the real extent of the impact that COVID-19 is having on the economy.

Most experts and analysts had predicted that the weekly jobless claim numbers would rise from 281,000 to around 1,500,000. However, the initial jobless claims filed were more than twice the predicted numbers.

By the time the data was released on Thursday morning, over 3 million workers were already out of a job.

The claims numbers had an immediate effect on the charts. The USD plummeted and continues to drop in value. Gold purchases however, have increased dramatically over the last couple of days.

Accurate figures for new jobless claims lie at 3,282,000 as against 281,000 for the previous week. This is an all-time high by some margin and conditions are only expected to get worse from here.

Technical

The price of gold pushed higher on Thursday. It reached new higher highs as well as higher lows but was unable to sustain the upward momentum for long.

Steadily, the yellow metal appears to be moving towards the initial resistance of 1702.94 that it reached earlier this month.

Support, on the other hand, is down at 1586.42. Movements on the monthly, weekly, and daily chart reveal the distinct rise. However, things have been more chaotic on the lower timeframes.

Fundamentals

 Following the release of the Initial Jobless Claims, gold has risen more than 1%.  The once strong USD has lost all momentum and is now going down rapidly against gold.

The United States is currently looking to approve its stimulus bill package while the Bank of England and European countries are also looking to push out a stimulus package to their citizens as well.

Amidst these actions, expect gold to continue to rise. Gold is viewed as a safe-haven asset during uncertain economic times such as a global pandemic.

We, therefore, expect this rise to continue as the United States and most of the other major world currencies continue to look primed for even larger setbacks than those seen in the 2008 global financial crisis.