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Gold Down 2% as Dollar Jumps on U.S. Jobs; Retreat Seen Temporary

CommoditiesAug 07, 2020 02:15PM ET
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By Barani Krishnan

Investing.com - Gold posted its biggest daily decline in two months on Friday, falling 2%, as the dollar rebounded on a better-than-expected recovery in U.S. jobs in July. The shiny metal’s prices, however, stayed well above the $2,000 per ounce support, indicating that its setback might be temporary.

The 0.8% rise on the greenback, the most in a day since March and which elevated the Dollar Index back above the 93.5 level, was also unlikely to be sustained, said forex analysts.

“We think that USD shorts were covered ahead of this report,” TD Securities said in a forex market note for the day. “A better data print now leaves the USD bid as tenuous. We see attractive risk/reward to lean short” the dollar.

The Labor Department said the United States added 1.8 million jobs in July, slowing from June’s 4.8-million jobs gain, as a new wave of coronavirus infections hampered the labor market recovery from the pandemic. Nearly 4.9 million Americans have already been infected by Covid-19 so far, with a death toll reaching above 160,000, according to Johns Hopkins University.  A model by the University of Washington has predicted 200,000 coronavirus deaths in the United States by Oct. 1, casting doubts on economic recovery. 

“The economic recovery is likely to struggle from here on out and that should keep real yields near their record lows,” said Ed Moya, an analyst at OANDA  in New York. 

“The dollar rebound was needed and will likely be temporary. Treasuries were due for a pullback and this will likely be temporary, too.”  

The front-month October gold futures contract on New York’s Comex settled down $40.40, or nearly 2%, at $2,018. On Thursday, October gold hit $2,070, record high for a benchmark gold futures contract on Comex.

In Friday’s trade, Comex’s December gold contract, which has attracted even more volume and open interest than October futures, settled down $41.40, or 2%, at $2,028. On Thursday, December gold surged to $2,089.20, an all-time high for any gold futures contract on Comex.

Spot gold, which reflects metal available for immediate delivery, meanwhile, was down $28.36, or 1.4%, at $2,034.82 at 2:50 PM ET (18:50 GMT) on Friday, after hitting a record high of $2,075.14 in the previous session.

Notwithstanding Friday’s declines, gold prices were still up some 32% or more on the year. Silver showed a gain of more than 52%.

Gold Down 2% as Dollar Jumps on U.S. Jobs; Retreat Seen Temporary
 

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Comments (11)
Mike Tottenberg
Mike Tottenberg Aug 08, 2020 12:50PM ET
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Some very respected metals analysts are predicting $100 silver
Gary Friauf
Gary Friauf Aug 07, 2020 9:45PM ET
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I convinced the dollar has formed a bottom and we should see upside in the coming week along with a much weaker market. I opened short futures positions today in both the S&P and the Russell. I will also be opening a short position in the EUR/USD Sunday night hoping the dollar has a good week.
Edward Chong
Edward Chong Aug 07, 2020 9:45PM ET
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u can ignore the charts. dollar rebound will be extremely weak.
Allen Drewe
Allen Drewe Aug 07, 2020 9:45PM ET
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Everything concrete says the dollar is going down. The only way it bounces is if there is no stimulus.
ZSA ALLEN KJV DR
ZSA ALLEN KJV DR Aug 07, 2020 8:10PM ET
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It's always good news for Gold prices to rise. Very good news.
Plopseven Schwartz
Plopseven Schwartz Aug 07, 2020 8:10PM ET
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Gold/silver rise (exponentially, like they had been recently) with uncertainty & market bloat. Not good at all.
eddie glass
eddie glass Aug 07, 2020 7:14PM ET
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Title correction: Now that gold and silver are 50-100% higher in price than where we bought them when they were being liquidated to us in March and we have successfully pumped bullion to retails at extremely high premiums, we will dump the price.
Stak Hard
Stak Hard Aug 07, 2020 7:14PM ET
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Hehehe miss the lows ? Hehehe
Jusuf Seferi
Jusuf Seferi Aug 07, 2020 4:21PM ET
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gold to 2150 by end of the month i supose
Geoff McKay
Geoff McKay Aug 07, 2020 4:21PM ET
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2200 mid Sept wouldnt surprise me
Rana Hamid
Rana Hamid Aug 07, 2020 3:33PM ET
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wao
munnu jay
munnu jay Aug 07, 2020 3:22PM ET
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lol. jobs are not even half of previous report. these analysts put really poor estimates to pump stocks
Barani Krishnan
Barani Krishnan Aug 07, 2020 3:22PM ET
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Munnu, I didn't go the full nine yards in saying that NFP expectations were 1.6 million and the actual number was 1.8 million. But that doesn't matter. I agree totally with you that this jobs recovery doesn't warrant such a strong USD rebound.
Plopseven Schwartz
Plopseven Schwartz Aug 07, 2020 3:22PM ET
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Barani Krishnan Metals fall with the indexes - look at March. If you’re investing in PM as a hedge, you’re going to have a bad time.
Andrew carson
Andrew carson Aug 07, 2020 3:16PM ET
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The dollar is not done declining by far..
steve fox
steve fox Aug 07, 2020 3:03PM ET
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stimulus signed over the weekend, gold gap up back to 2060
Tom Woosley
Tom Woosley Aug 07, 2020 3:03PM ET
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Who's going to sign it? The House is supposed to be out for a month and will have to be called back early. The Senate is still mulling it over and they both have to sign off before it goes to Trump.
Miriam Morkhul
Miriam Morkhul Aug 07, 2020 3:03PM ET
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Executive order. Just saying, no idea what has happened so far. Just Dem/Rep clinching.
Phillip Qhina
Phillip Qhina Aug 07, 2020 2:54PM ET
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Well said
Gopi Ragavan
Gopi Ragavan Aug 07, 2020 2:36PM ET
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very good
 
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