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Gold Prices Lose Altitude after November Jobs Report

Gold prices pared slight gains on Friday as a November report on job creation in the U.S. came in cooler than expected, marking a low for employment growth since the start of the COVID-19 recovery in May.

But bullion remains on pace to notch its first weekly gain in the past month.

February gold was up 90 cents, or less than 0.1%, at $1,841.90 an ounce, after gaining 0.7% on Thursday to mark the highest finish for a most-active contract since Nov. 20, according to FactSet data. If the commodity logs a fourth straight gain, it would represent the longest win streak since Aug. 6.

Meanwhile, March silver added 3 cents, or 0.1%, to trade at $24.17 an ounce after rising 0.2% in the prior session.

The U.S. economy regained 245,000 jobs in November and the unemployment rate declined again, the government said Friday, but hiring fell to a seven-month low and a record rise in coronavirus cases is making it harder for people to return to work.

The increase in jobs last month fell short of the 432,000 forecast of economists polled by MarketWatch.

“Gold futures prices are chopping on both sides of unchanged in early U.S. trading Friday and got a slight initial lift from a U.S. jobs report that was a bit weaker than expected. However, those modest gains were quickly erased,” wrote Jim Wyckoff, senior analyst at Kitco.com.  

For the week, gold is on pace for a 3.3% weekly gain, which would snap a three week losing streak. Silver futures were looking at a 7.8% weekly rise, also marking its first weekly gain in about a month.

The yellow metal’s rise this week has come after it touched a roughly five-month low to start the week, with that decline precipitated by growing hope around COVID-19 vaccine progress.

However, a steady bout of weakness in the U.S. dollar has emboldened gold bulls, as has the prospect of a fresh round of fiscal aid in the U.S. to combat the economic damage from the viral outbreak—both seen as bolstering appetite for gold and other precious metals.

Senate Majority Leader Mitch McConnell, R-Ky., said Thursday that reaching a compromise on another coronavirus fiscal stimulus package was possible, as long as Democrats moved toward Republican positions.

Gold, against that backdrop, has surged 3.2% so far this week as the dollar, as measured by the ICE U.S. Dollar Index, has fallen 1.3% to around its lowest level since 2018.

“The sell-off seen on the US Dollar is boosting gold recovery,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades, in a daily note.

The analyst said that although news of cures for the deadly disease are bearish for gold, the development of remedies won’t entirely undercut the bullish thesis for the precious metal, which also has been rising on high government spending across the globe.

“Now, investors are realizing, once again, that gold will remain crucial in the medium and long term, as central banks will be forced to continue to print money to sustain economies,” De Casa wrote.

The ActivTrades analyst said gold may meet some resistance at $1,850, which had stood as previous support for the metal before its breakdown late last month.

Source: Marketwatch


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