By Barani Krishnan
Investing.com - ‘What inflation?’
The gold bull could have been asking that for the umpteenth time as the yellow metal couldn’t muster a second straight weekly close above $1,900 on Friday, despite incessant noise across markets about price pressures.
A mixed U.S. jobs picture did help activate gold’s other quality — safe-haven — helping it crawl out of the near mid-$1,800 levels it tumbled to on Thursday.
Yet, both futures and the spot price of bullion stopped just shy of attempting to return to the $1,900 berth that would have bolstered the confidence of gold longs going into the new week.
The front-month gold futures contract on New York’s Comex settled at $1,892 per ounce, up $18.70, or 1%. Friday’s session peak was $1,898.90. For the week though, the front-month contract fell 0.7%.
The previous weekly close on May 28 was the first weekly gold settlement above $1,900 since November.
The spot price of gold, reflective of real-time trades in bullion, was at $1,891.05 by 2:33 PM ET (18:33 GMT), after an intraday peak at $1,896.19
Gold tumbled from its $1,900 perch on Thursday after data showing weekly U.S. employment claims at the lowest since the outbreak of the coronavirus pandemic in mid-March 2020. The suggestion of a marked improvement in the labor market sent gold’s rivals U.S. bond yields and the dollar surging instead as Comex futures tumbled to a Thursday low $1,866.85 while spot gold touched a nadir of $1,865.49.
But less than 24 hours later, the U.S. jobs picture was looking entirely different.
The Labor Department’s non-farm payrolls for all of May showed that the United States added 559,000 new jobs in May and the unemployment rate fell to 5.8%. But economists expressed disappointment with the total jobs growth for last month that came in some 115,00 less than forecasts, showing recovery still had a long way to go.
Immediately, talking heads at research houses began espousing theories that the Federal Reserve will be nowhere near to raising interest rates or pulling back the $120 billion of bonds and other asset purchases it has been carrying out monthly for the past one year to support the economy.
Notwithstanding that, the chatter about inflation — reaching almost gibberish at this point, given the Fed’s indifference to the whole thing — did bunk for gold bulls’ aims of returning to $1,900.
Some analysts, however, remained upbeat on gold.
“The move in real yields crushed gold prices for most of the week. But the May nonfarm payroll report showed markets that the April report was not a fluke,” said Ed Moya, analyst at online trading platform OANDA.
Moya said any Fed tightening of rates or so-called tapering of asset purchases will likely wait until the end of annual summer Fed convention at Jackson Hole, Wyoming.
“Much of the bearish positioning before the nonfarm miss should be undone as the Fed will be seen nowhere ready to talk about tapering,” he said, adding that this augured well for gold.