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‘Loveless’ Gold Can’t Sit at $1,800 as Fed, U.S. Jobs Numbers Loom

Published 10/29/2021, 01:16 PM
Updated 10/29/2021, 01:17 PM

By Barani Krishnan

Investing.com - Another week and another failed attempt to advance beyond $1,800.

Gold’s fate of being stuck — for now at least — in $1,700 territory seems real as the Federal Reserve heads for its monthly meeting on Tuesday and Wednesday, where the noise of U.S. stimulus tapering is likely to get louder.

If that isn't enough, the U.S. jobs report for September is due next Friday, and any growth number in that might be enough for Fed Chair Jerome Powell and his coterie of policy makers looking to snip $15 billion each month from the central bank’s monthly bond buying of $120 billion.

U.S. gold futures’ most active contract, December, were down $20.75, or 1.2%, at $1,781.85 an ounce by 1:15 PM ET (17:15 GMT).

For the week, it was down almost 1%, its sharpest loss in six weeks.

“Gold is not finding any love with European sovereign funds or for that matter any of the major institutions,” said Phillip Streible, precious metals strategist with Chicago’s Blue Line Futures. “It’s like the moment it hits $1,800, people hit the sell button. That’s what happened today, and the cascade of sell stop orders below just acted like falling pins.”

“This is just the end of a bad week for gold that isn’t going to get any better next week with the Fed meeting and jobs numbers looming. I’m looking at a retest of the $1,750 level and possibly much lower.”

The dollar’s spike to a two-week high also weighed immensely on gold in Friday’s trade as the yellow metal suffered at the advance of its biggest rival.

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The dollar surged after data on Friday showed the Fed’s annual inflation gauge hitting a 30-year high in September, keeping the pressure up on the central bank’s policy makers as well as the Biden administration in reigning in surging costs.

U.S. consumer sentiment also remains at risk from soaring inflation although Americans seem resigned to higher costs from economic upheavals caused by the coronavirus pandemic, the University of Michigan said on Friday in the latest iteration of its closely-watched consumer survey.

While gold is supposed to be a hedge against inflation, it has barely lived up to that billing this year as expectations that the Fed will have to raise rates at some point has weighed on the metal.

Latest comments

I was quick to buy the dip. All this negative headwinds are already priced in and the bulls are making money. sell the rip buy the dip on gold eveytime
for Pete's sake, Gold will always be worth something and so most of the holes in the ground will. Many of the latter even pay a dividend at or above the 10y yield ( unfortunately just a few above inflation rate). Imagine AU or the miners for that matter would skyrocket right now. then what? Sell them and use the proceeds for what? After some years of raging inflation it barely makes a difference if you sit on a pile of 1 or 10 million dollars. Sittning on a bunch of cashflow positiv stocks could make a very big difference though.
Lawrenti, welcome back, my brother. It's been a while. You, of course, know that this report doesn't reflect my true feelings about gold. But it's factual -- even the quote from Phil (he's neutral gold actually) -- and it is what it is, unfortunately.
Hey Barani, be sure, I'm a regular reader of your articles, only I don't leave many comments. And of course, I know you like this shiny rock as much as I do. See you around brother!
Thanks for the free gold :)
Fridays jobs report is after the decision on tapering?
On the contrary I think this doom and gloom attitude signals the low end of market sentiment for gold, and pessimism is already priced in. Miners are a bargain at todays prices.
MANIPULATION -CRIMEX
When every talking head bashes gold... Good time to buy more
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