Gold rose early Thursday, regaining some luster for the week, with investors partly attributing the advance for the yellow metal to traders hedging bets ahead of the important U.S. jobs report on Friday.
“The gold price has made a high of 1900 as investors hedge their bets ahead of the most important economic reading, the U.S. NFP,” wrote Naeem Aslam, analyst at Avatrade, referring to the nonfarm-payrolls report for September from the U.S. Labor Department due at 8: 30 a.m. Eastern on Friday, which could give a snapshot of the health of the employment picture.
Bullion bulls have viewed gold during the coronavirus pandemic as one of the easiest ways to hedge against a host of uncertainty fostered by the public-health disaster that has forced central banks around the world to adopt low-interest-rate policies to limit the harm to businesses.
Concerns about a possible contested presidential election in the U.S. in November, where the loser doesn’t concede defeat immediately and/or the winner isn’t determined on Election Day on Nov. 3, also is seen as a potential catalyst for gold buying.
“The odds are stacked in favor of higher gold price in the coming days, especially because the U.S. elections are just around the corner, and investors want to protect themselves from this major risk event,” Aslam said in a note.
Worries about the U.S. presidential election outcome were reinforced on Tuesday after a closely followed debate between President Donald Trump and challenger former Vice President Joe Biden descended into chaos and acrimony.
A retrenchment of the U.S. dollar after a brisk weekly run-up last week also has helped to buttress the value of assets pegged to the U.S. currency like gold. A weaker dollar can make purchasing dollar-priced gold more compelling to overseas buyers. The ICE U.S. Dollar Index was off 0.3% on Thursday and headed for a weekly slump of 1.2% after posting a 1.8% weekly advance last week.
Against that backdrop, December gold was up $11.40, or 0.6%, at $1,907.40 an ounce early Thursday, after rising 0.4% on Wednesday. December silver meanwhile, picked up 44 cents, or 2%, to reach around $23.93 an ounce, after tumbling 3.9% in the previous session.
In September, gold lost 4.2%, but advanced 5.2% over the three-month period ended in September, according to Dow Jones Market Data, tracking the most-active contract. Meanwhile, silver shed nearly 18% in September, but rallied by 26% for the quarter.