Gold’s record breaking rally halts as dollar strengthens

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August 7, 2020

Gold dipped nearly 2% on Friday, snapping its record-breaking rally, after a slightly better-than-expected U.S. jobs report boosted the dollar, but a worsening pandemic kept prices on track for their longest streak of weekly gains in about a decade.

Spot gold fell 1.5% to $2,031.69 per ounce by 10:39 a.m. EDT (1439 GMT), after hitting a record high of $2,072.50. It has added 2.8% so far this week for what would be its ninth straight weekly gain.

U.S. gold futures slipped 1.5% to $2,031.69.

“The dollar rebounded quite strongly after the jobs report. That clearly caused a bit of a sell-off across the board in the metals sector,” said David Meger, director of metals trading at High Ridge Futures.

“The thought process would be that with the slightly better than expected jobs number, the economy is slowly regaining its footing and, hypothetically, we would then see a lesser need for stimulus.”

The dollar strongly rebounded from a two-year low, after the U.S. nonfarm payrolls increased by 1.763 million jobs last month and on renewed U.S.-China tensions.

Safe-haven gold has risen 34% this year amid surging COVID-19 cases, which have battered global economies and prompted unprecedented stimulus measures.

Meanwhile, U.S. Democratic leaders and White House officials failed to make substantial progress on a new coronavirus aid bill.

“Once they agree on a stimulus it’ll be bearish for the dollar. The global economy is still very wobbly and as a result we’re going to get a lot more easy money, so all that is tailwind for gold,” said Edward Meir, analyst at ED&F Man Capital Markets.

Gold can still end the year at $2,200-$2,300, he added.

Elsewhere, silver slid 4.6% to $27.62 per ounce, having earlier hit its highest since February 2013 at $29.84. It has gained about 13.6% so far this week.

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Platinum dipped 5.2% to $946.16, while palladium declined 4.7% to $2,116.16.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

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Gold’s record breaking rally halts as dollar strengthens

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