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Gold Erases Losses Despite Strong June Jobs Report

July 2, 2020 at 14:55 by Andrew Moran

Gold futures erased their losses in intraday trading on Thursday, despite a strong June jobs report that sparked a huge rally in the broader financial market. Gold prices immediately plunged on the better-than-expected news, but then they turned positive on a weaker US dollar and skepticism over the labor numbers.

August gold futures tacked on $6.70, or 0.38%, to $1,786.60 per ounce at 14:26 GMT on Thursday on the Comex division of the New York Mercantile Exchange. The yellow metal initially shed more than $10 after the US government released the job figures, but then it pared the decline. Gold is poised for a weekly boost of 0.7%, lifting its year-to-date gain to 17.5%.

Silver, the sister commodity to gold, is also rising to finish the holiday-shortened trading week. September silver futures picked up $0.112, or 0.61%, to $18.33 an ounce. The white metal had also dropped on the stellar June jobs report before returning to green territory. Silver will record an impressive weekly surge of 2.3%, bringing its YTD increase to 2.5%.

On Thursday, the Bureau of Labor Statistics (BLS) reported that the economy created 4.8 million new jobs in June, coming in higher than the median estimate of three million. The unemployment rate slipped to 11.1% last month, beating the market forecast of 12.3%.

Every sector enjoyed huge increases in labor numbers, led by leisure and hospitality (2.088 million), retail (739,800), and education and health services (568,000). The US government further revealed that the labor force participation rate climbed to 61.5%, average weekly hours slid to 34.5, and average hourly earnings fell 1.2%.

Despite the jubilation on the stock market and in the White House, some analysts believe the resurgence in confirmed coronavirus cases is triggering some consternation that the labor market could experience a setback. Gold bugs are ostensibly skeptical that job creation and the unemployment rate could continue the momentum of the last two months if the pandemic is intensifying.

On Wednesday, the US endured the largest single-day record of COVID-19 cases on record, totaling more than 52,000. America leads the world with 2.74 million cases.

Gold could find additional support over the coming months as the Federal Reserve revealed in its June policy meeting minutes that the central bank would continue to support the economy with a highly accommodative monetary policy. This is bullish for gold since it would inevitably lead to higher price inflation and lower yields amid historically low interest rates.

A timid greenback contributed to gold’ modest jump at the end of the trading week. The US Dollar Index, which measures the greenback against a basket of currencies, tumbled 0.1% to 97.10, from an opening of 97.15. A lower buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.

In other metal markets, August copper futures were flat at $2.7365 a pound. August platinum futures shed $5.20, or 0.62%, to $829.20 an ounce. August palladium futures dipped $5.70, or 0.3%, to $1,925.00.

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