Further adding to expectations that gold is at the start of a new bull run, it has gained again following a massive spike in the number of US jobless claims. The data this week shows a 6 million person increase – a figure which is 10 times higher than the previous record. The US Labor Department data shows 6.65 million people submitted claims in the week to 28th March. This was up from 3.3 million the week before. To put those figures into context, the 2008 recession saw just 665,000 claims submitted.
The number has perhaps been boosted due to the unprecedented $2.2tr stimulus package which became law last week and allowed freelancers and self-employed workers impacted by coronavirus to submit claims.
Oxford Economics’ chief US economist Gregory Daco has warned this figure is likely to escalate further, explaining “The prospect of more stringent lockdown measures and the fact that many states have not yet been able to process the full amount of jobless claim applications suggest the worst is still to come.”
In light of these figures, gold leaped 2.9%. RJO Futures’ senior market strategist Bob Haberkorn said this is a sign of things to come. He commented, “The longer this thing drags out, the worse the situation will be in longer term. Gold is an asset that should do well through all this turbulence, all the money that is being printed to combat the effects of the virus and the interest rates being dropped to zero.
Analyst Edward Meir, of ED&F Man Capital Markets agrees, noting that “We think that gold will likely continue to play an important role in investor allocations over the next few months given all the turbulence… Signs of prolonged economic weakness and increasingly aggressive stimulus measures pursued by governments and central banks should provide gold with something of a floor for at least a couple of years.”
Buy now to capitalise.