Yahoo Finance Gold Snaps 9-Day Rally But Upside for $2,000 Still Evident
By Barani Krishnan
Investing.com - Gold’s nine-day run-up hit a bump on Thursday on across-the-board selling by investors responding to the worst economic quarter in U.S. history. But the low for the day — above the $1,930 level — suggested the sell-off would barely last beyond the weekend.
“After a 10% rally since the middle of the month, gold prices seem ripe for a pullback,” said Ed Moya, an analyst at New York’s OANDA.
“But safe-haven demand remains steady after a disastrous second quarter GDP reading, consistently high weekly jobless claims figures, partisan politics preventing progress toward a virus relief bill on Capitol Hill, and nervousness about four giant tech earnings after the close.”
Spot gold, a real-time indicator of trades in gold bullion, was down $16.98, or 0.9%, at $1,953.87 by 2:20 PM ET (18:20 GMT). The session low was $1,939.69 — well above the level it attained when it first rewrote this week its record highs from 2011.
The more important front-month August gold futures contract on New York’s Comex settled down $11.1, or 0.5%, at $1,942.30.
It was the largest one-day decline in Comex gold since July 16 and came as data showed the U.S. economy shrunk almost 33% in the second quarter, a plunge not seen since the era of the Great Depression.
U.S. weekly unemployment claims, also released Thursday, showed some 1.43 million Americans filing for first-time unemployment benefits last week. Federal Reserve Chairman Jay Powell warned on Wednesday the pace of economic recovery has slowed since business reopenings from lockdown. He also said some jobs lost to the pandemic may never return, adding that many laid off from eateries and places of public entertainment such as restaurants and bars do not have enough jobs to return to.
On the Covid-19 front, the United States has recorded more than 4.4 million infections, according to Johns Hopkins University. The nation’s death toll from the pandemic, meanwhile, has crossed 150,000, accounting for more than one-fifth of global fatalities from the virus.
Gold’s slide on Thursday was also accelerated by longs clearing positions ahead of Friday’s final settlement for those not wanting to take physical delivery of the metal before the expiry of the August futures contract.
December gold, the upcoming front-month, settled down $9.90, or 0.5%, at $1,966.80 on Thursday.
Moya said the market’s broader upside was intact and saw an imminent rebound, even as some called for a deeper correction ahead of gold bulls’ target for $2,000 an ounce.
“Virus uncertainty, election risks, a stalling recovery, and no signs of the slowing stimulus trade will have investors buy any dip in gold prices for the rest of the year,” he said.
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