2020.05.2010:42:00UTC+00Gold Prices Rise After Weak US Data

Gold prices inched higher on Wednesday after data showed U.S. homebuilding dropped by the most on record in April and permits for future construction tumbled, underscoring the extent of damage from the coronavirus pandemic.

Spot gold rose 0.4 percent to $1,751.88 per ounce, while U.S. gold futures were up 0.6 percent at $1,756.90.

With the U.S. economy in free fall, investors fear that the coronavirus crisis would lead to the deepest economic contraction in the second quarter since the Great Depression.

Federal Reserve Chair Jerome Powell said on Tuesday layoffs by state and local governments will slow the U.S. economic recovery.

Separately, Boston Federal Reserve Bank President Eric Rosengren said the outlook for the economy is sobering and he expects the unemployment rate will peak at close to 20 percent.

U.S. Treasury Secretary Steven Mnuchin warned the economy risks suffering "permanent damage".

Doubts over a potential coronavirus vaccine also intensified fears over prolonged global economic recession.

Overnight, a report from STAT News questioned the validity of the results of Moderna's vaccine trial that had sent stock markets soaring on Monday.