Gold Down Almost 3% as U.S. Job Gains Crush Safe-Haven

Gold Down Almost 3% as U.S. Job Gains Crush Safe-Haven

Investing.com  | Jun 06, 2020 03:25

Gold Down Almost 3% as U.S. Job Gains Crush Safe-Haven

By Barani Krishnan 

Investing.com — A surprise leap in U.S. jobs numbers for May struck a vicious blow to safe havens and gold bugs’ hopes of advancing toward the $1,800 mark.

Gold futures fell nearly 3% Friday, falling off their $1,700 perch, after the Labor Department said in its nonfarm payrolls report that 2.5 million Americans re-entered the workforce in May. Stocks on Wall Street rallied on the news, with the Dow jumping more than 3%. The dollar, a contrarian trade to gold, also rose, though by a more modest 0.3%.

The May payrolls report confounded economists who had predicted a job loss of 8 million in May as the coronavirus kept parts of the U.S. economy closed for a third straight month.

The report also jarred with separate data released a day earlier by the Labor Department, which said it received weekly unemployment claims for the first time from 1.9 million Americans, bringing to nearly 43 million the number receiving jobless insurance since the Covid-19 hit home in March. Gold prices jumped 1% on Thursday, reacting to the jobless claims numbers.

U.S. gold for August delivery settled down $44.40, or 2.6%, at $1,683 per ounce on New York’s Comex. It was the sharpest one day for Comex gold in nine weeks. For the current week itself, August gold lost 2.5%.

Spot gold, which tracks real-time trades in bullion, fell by $32.47, or 1.9%, to $1,681.68 by 2:55 PM ET (19:55 GMT).

“Gold traders rushed for the exits after they were stunned by the robust nonfarm payroll report,” said Ed Moya, analyst at New York’s OANDA.  “It will be hard for the Fed to remain extremely accommodative if the world’s largest economy is already in recovery mode.”

The Federal Reserve, the U.S. Treasury and Congress have jointly approved and disbursed trillions of dollars in loans, grants and outright aid to businesses and individuals in recent months because of the Covid-19-triggered economic downturn.

Some analysts, however, remained optimistic that gold would regain some upward momentum in the near-term despite the risk rally in stocks.

“I expect a return by next week to the basics of global economic recovery, before more headlines on Middle East worries, China-U.S. tariffs, debt and creeping — not negative interest rates — give gold a leg up,” said George Gero, managing director in charge of the precious metals portfolio at RBC Wealth Management in New York.

Moya concurred with that view.

“Gold might not get much more support from the Fed, but geopolitical risks, second wave concerns, and an eventually weaker U.S. dollar should keep the longer-term bullish outlook intact,” he said.

Related News

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Discussion
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (UK) English (India) English (Canada) English (Australia) English (South Africa) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes

+

Download the Investing.com App

Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors.

Investing.com is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.