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Gold Hits $2,070, Silver $27 as Precious Rally Goes Ga-Ga

CommoditiesAug 05, 2020 02:05PM ET
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© Reuters.

By Barani Krishnan

Investing.com - The bull run in precious metals showed little sign of slowing on Wednesday as the dollar fell its most in over a week, catapulting gold to a fresh record high above $2,070 an ounce and silver to a seven-year high exceeding $27.

“The gold trade just went from ridiculous to ludicrous speed,” Ed Moya, an analyst at New York’s OANDA, said, as U.S. gold futures tacked on a weekly gain of 4%, with another two days left to the trading week. 

“The Treasury quarterly record bond issuance put an exclamation point on the belief the Fed will not raise rates for several years and that they will do more before the year ends,” said Moya.  “Gold is about to benefit from another wave of inflows from the fixed income market.  The search for yield is likely to see many investors just continue to add to their gold holdings.”

The front-month October gold futures contract on New York’s Comex settled up $28.60, or 1.4%, at $2,037.10. Its session peak of $2,057.50 set an all-new high for a benchmark gold futures contract on Comex.

Notwithstanding that, Comex’s December gold contract, which has attracted even more volume and open interest than October futures, surged to a record high of $2,070.30, before settling at $2,049.30, up $28.30, or 1.4% on the day.

Spot gold, which reflects metal available for immediate delivery, meanwhile, hit a record high of $2,055.79.

By analysts’ estimates, there are no clear ranges on how high gold could go before consolidating, though $2,150 to $2,200 did not seem an outrageous bet.

In silver, the front-month September contract on Comex settled at $26.89, up 86.2 cents, or 3.4%, on the day after scaling $27.242 earlier, its highest since April 2013. Bulls expect silver to hit $30 by the year-end.

With Wednesday’s rally, gold is up as much as 35% on the year while silver has gained almost 50%.

Market bears, meanwhile, are pointing to a top-heavy bubble-like trade that they say could pop soon despite the dollar cratering on the weight of plunging U.S. 10-year yields and real rates, as well as the issuance of more than $3 trillion in U.S. coronavirus relief funds since March. 

Some say the next 48 hours, especially, are crucial to both precious metals and the dollar, with the U.S. Labor Department set to report on Friday job numbers for July amid continued recovery from the coronavirus pandemic. A positive nonfarm-payrolls report for last month, following through with the positive data of the previous two months, could flip the dollar’s fate and lead to some profit-taking in gold.

U.S. economic recovery from Covid-19 has been mixed with employment rebounding by a combined 7.3 million jobs in May and June, after a loss of more than 21 million jobs between March and April.  But the economy itself shrank by a record 32.9% in the three months through June, adding to the 5% contraction in the first quarter, as business lockdowns forced by the pandemic took a toll on growth.

Analysts consensus for the non-farm payrolls growth in July is 1.6 million jobs. But President Donald Trump, who needs to tout a big economic recovery to boost his reelection hopes in November, suggested on a Fox News appearance on Wednesday that “big jobs numbers (were) coming on Friday," though private payrolls data keeper ADP reported Wednesday that just 167,000 jobs were added in July.

“Trump is betting his reelection that the economy will bounce back stronger with him than with Biden,” said Moya. “If ADP and ISM have anything to say about Friday’s numbers, investors may expect a softer reading than the consensus estimate of 1.6 million jobs created.”

Gold Hits $2,070, Silver $27 as Precious Rally Goes Ga-Ga
 

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Comments (12)
Andrin Fx
Andrin Fx Aug 06, 2020 4:29PM ET
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Comex selling gold..price adjustment..will see -5% drop below 2070..1965-1960 soon
humayoun nabi
humayoun nabi Aug 06, 2020 4:03AM ET
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gold will be 3500 plus and silver 100 plus ...
Amjad Kamboh
Amjad Kamboh Aug 06, 2020 12:16AM ET
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What can i do buy or sell
Chris Garcia
Chris Garcia Aug 05, 2020 10:23PM ET
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The precious metals bull market has only just begun. Gold is going to $2500+ and Silver $50+ by the election. You’ll remember this comment and be filled with regret if you don’t get in soon!
Edward Chong
Edward Chong Aug 05, 2020 10:23PM ET
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haha u really make me laugh.
Jusuf Seferi
Jusuf Seferi Aug 05, 2020 10:23PM ET
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if vacine will be surprise from Trump before election gold will go down i supose
Ejike Richard
Ejike Richard Aug 05, 2020 10:23PM ET
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hahahaha, you must be green to commodity markets
Calvin Sky
Calvin Sky Aug 05, 2020 10:23PM ET
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commodity has till late october to shine :)))
Jgerryi Jgerryi
Jgerryi Jgerryi Aug 05, 2020 6:22PM ET
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Of the other currencies, the euro is getting stronger (Germany (unlike the usa, protects its manufacturering and keeps dry powder available for emergencies) Coppers up 10 percent yoy, silver is? Nearly double yoy? Silver is outperforming gold in gains. It's no longer trading as a commodity, it's starting to trade as money. People are worried. 30 percent of usapop is now saving their money.
Michael Paulsen
Michael Paulsen Aug 05, 2020 6:22PM ET
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And they don't pay enough for us to protect them. Those Germans
eddie glass
eddie glass Aug 05, 2020 6:13PM ET
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the banks loaded up on all those liquidated gold/silver positions in march for half the price, now pumped the price and unloading to retails who are chasing here thanks to headlines like this. meanwhile big money loading up on bonds before the dollar pump.
Edward Chong
Edward Chong Aug 05, 2020 6:13PM ET
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will pump the dollar for sure but wont be much.
eddie glass
eddie glass Aug 05, 2020 5:56PM ET
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headlines like this let me know it is time to get out of PMs
Stak Hard
Stak Hard Aug 05, 2020 5:56PM ET
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You were never in PM lol
joninge kvamme
joninge kvamme Aug 05, 2020 3:49PM ET
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I do belive trump has made the old american dollar worthless with his stockmarket bonanza.
The Big Fish
The Big Fish Aug 05, 2020 3:49PM ET
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It's not Trump. it's Congress and the Fed
Jgerryi Jgerryi
Jgerryi Jgerryi Aug 05, 2020 3:49PM ET
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Yoy dow is up, what.. 2 percent? Maybe it's something else destroying the dollar. Gdp? Feds balance sheet?
eddie glass
eddie glass Aug 05, 2020 3:49PM ET
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The Big Fish  8 years of obama with zero interest rates and massive QE and dollar tanked. dollar rose to significant highs under trump with dollar index above 100 for the first time in years, in fact trump went around for a while trying to encourage gains in the USD. yet it is trump's fault according to T.d...s victims for virus from china and the democrats wanted to lockdown the country (namely blue states have done terribly) which proved to be completely pointless. the fed is to blame, for years of manipu.lation of the USD to save stonks that far precedes trump
Danny Brasko
ThisIsAmerica Aug 05, 2020 3:25PM ET
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How is precious metals seeing marginal gains based on sound fundamentals and real concerns for devaluing USD considered "gaga"? But unlimited printing and irrational trading behavior based n reckless monetary policy consider great market function?
Barani Krishnan
Barani Krishnan Aug 05, 2020 3:25PM ET
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Ga-ga is a "capture" of the market feeling. Read the entire story, and you'll find that I agree completely with this rally -- not against it in any way. Thanks
Lawrenti Berija
Lawrenti Berija Aug 05, 2020 3:25PM ET
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I see, generating clicks by engineering controversy
Barani Krishnan
Barani Krishnan Aug 05, 2020 3:25PM ET
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Lawrenti Berija  Understand something: No individual owns market sentiment. It's a collective. Talk to even the most ardent gold bull and you'll find the individual professing surprise (albeit pleasant) at the market's recent performance. Ga-ga perfectly captures the mood out there. That said, this gold rally is happening for all the right reasons. As I said in a separate analysis, I expect $2,150 at some point. Take care.
Andy He
Andy He Aug 05, 2020 3:25PM ET
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Barani Krishnan  How do you know how the market feels? Did you ask all the market participants, traders, etc.?  Or is it just merely your opinion based on what? Your buddy Ed Moya maybe?
Barani Krishnan
Barani Krishnan Aug 05, 2020 3:25PM ET
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Andy He  Are you going to spend the rest of the afternoon looking up every response of mine to people on this forum and lending to a wisecrack to it? How many people do YOU speak to on the market to dispute what I say. How many research notes do you read each morning? Are you up at 4 AM EST to follow the Singapore handover to Europe? Do you speak to trader groups in India, the world's most active physical market for gold to gauge market sentiment? I do all these, so I have a fairly good idea of what I'm talking about.
Andy He
Andy He Aug 05, 2020 3:12PM ET
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So called "market analysts" don't know more than anyone else...otherwise they would be busy investing their money and make a fortune in the markets they cover.... Instead they restate historical facts and blablabla to justify and give price target outs...useless just like the weatherman!!  If they can predict the future price, please give me the lottery numbers for the next draw since we have all the past winning numbers...Im sure there is a pattern somewere lmao Bottom line: noone knows how this goes
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Andy He
Andy He Aug 05, 2020 3:12PM ET
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Barani Krishnan     Great. You called it! Congrats! One of those... Can I have the lottery numbers for this weekend? Thought you agreed noone knows but doesn't seem to apply to you..since you called it! Never said I know lol
Barani Krishnan
Barani Krishnan Aug 05, 2020 3:12PM ET
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Andy He  I think you are one of those who love to split hairs on the finer nuances of a sentence instead of seeing the outright logic in it. Yes, "no one" applies to me as well, if you need to hear it again and it makes you feel better. The fact that I called the market right from $1,600 doesn't mean I'm going to be right again. The point is this: As an analyst, my job is to present all the variables out there in the marketplace (which you can see from here covers both the bullish and bearish views) so that the reader can hopefully make an informed decision. Hope that helps you understand  better what is expected of people like me in this space. Thanks.
Andy He
Andy He Aug 05, 2020 3:12PM ET
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Barani Krishnan Sorry no offense, I would not call you an analyst. There is a reason I used "They" in my original post. You are merely summarizing what "some analysts", Ed Moya (who seems to be the only precious metals analyst in the world being mentioned in every story on https://investing.com) saying or referencing the "analysts' estimates"...do they have names or are the ficticious? And as a self proclaimed "analyst", you actually should be paying attention to the finer nuances and all the details. Cheers!
Barani Krishnan
Barani Krishnan Aug 05, 2020 3:12PM ET
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Andy He  I cite Scott Shelton @ ICAP, John Kilduff @ Again Capital, Phil Flynn @ Price Futures and a bunch of others in my work for Investing. But yes, Moya and his colleagues at OANDA tend to get more mentions on Investing because they kind of encapsulate the market's read in a better way than many. And I am a bonafide analyst for Investing too (my job remit is actually that, though you seem to have trouble believing that). Since I also report on the daily moves of oil and gold, I don't use the title. To your doubts about our sourcing, I read various analysts' notes as I put together these daily reports, so I don't particularly name anyone unless I'm quoting the individual directly. No attempt to fake here, mate. And yes, I'm a stickler for details, though I also believe in seeing the logic in simple characterizations. Thank you.
The Big Fish
The Big Fish Aug 05, 2020 3:12PM ET
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don't pick up the fights, just keep writing. Any views on Copper continuation triangle?
Jesse Mulliniks
Jesse Mulliniks Aug 05, 2020 2:37PM ET
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Rest in Peace United States Dollar
paul guzman
paul guzman Aug 05, 2020 2:26PM ET
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comprar oro  compañeros...nada mejor que tener oro en su cartera
The Big Fish
The Big Fish Aug 05, 2020 2:26PM ET
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Comprar ahora q está en la cumbre. Muy buena manera de perder dinero.
 
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