Gold News

Gold Price Loses Bounce After US Jobs Data, Holds 3% Plunge from Records

GOLD PRICES rallied and then fell back on Friday, first bouncing from multi-week lows against all major currencies only to retreat again as Western stock markets struggled following weaker than expected US job data.
 
Major government bond prices also bounced from Thursday's sharp sell-off, edging interest rates back down after surging from all-time record lows.
 
Chart of 10-year German Bund yields. Source: Investing.com
 
Yesterday saw gold sink over 3% in US Dollar terms after the ADP Payrolls company said the world's largest economy saw better than expected jobs growth last month.
 
Beijing and Washington also said they will re-start talks to resolve the US-China trade tariffs war in early October.
 
Both ahead of and then again after the US government's official August jobs estimate on Friday, Euro gold prices traded €50 per ounce below Wednesday's new all-time peak, while the UK gold price in Pounds per ounce fell to test August's low at £1220 after jumping 32.1% in 4 months.
 
Gold priced in the Dollar edged back down to finish US trade at $1505, down more than $50 per ounce from Thursday morning's fresh 6.5-year high.
 
Chart of US Dollar gold price. Source: BullionVault
 
"Heavy losses for the precious as trade tensions appear to ease," says a trading note from Swiss finance and refining group MKS Pamp.
 
"Gold plummeted to [Thursday's] low of $1506 in early New York hours as equities climbed."
 
Betting on a half-point rate cut at the Fed's mid-September meeting has evaporated this week from 15% of speculative wagers according to data from the CME derivatives exchange.
 
Wagers that Powell's team will instead make no change – and leave rates at a ceiling of 2.00% – have risen to more than 1-in-8 speculative bets, but the odd-on forecast remains a quarter-point cut.
 
"Our economy is very strong," tweeted US President Donald Trump this morning, quoting celebrity stockpicker Jim Cramer.
 
"If the Fed would lower rates to where the bond market says they should be, then I really wouldn’t worry about a recession."
 
"A solid economy makes a deal between Washington and Beijing less likely," says a column on Bloomberg – dismissing yesterday's rally in equity markets – because "as long as the economic consequences are manageable ahead of the 2020 election, the pressure on...Trump to offer any compromise is reduced."
 
Thursday's plunge in precious metals prices coincided with heavy investor selling from gold- and silver-backed ETF trust funds.
 
The No.1 US-listed gold fund, the GLD, shrank from its largest size in nearly 3 years, losing 6.1 tonnes from Wednesday's peak of 896 tonnes, and iShares' SLV silver product also shrank as investors liquidated stock.
 
"Thursday's data was [also] positive, causing gold prices to reduce," Reuters quotes Singapore dealer Brian Lan at GoldSilver Central, pointing to the ADP report.
 
"We now expect a lot of volatility in the gold markets...[But] gold is still seen as a safe haven asset. A correction [was] bound to happen."

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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