By Barani Krishnan
Investing.com - Even the worst U.S. jobs numbers in history couldn’t result in much of a safe-haven bid for gold.
Optimism that the world’s largest economy will recover from the unprecedented blow dealt by the coronavirus propped Wall Street up instead.
The rise in risk appetite for stocks drove gold and the erstwhile safe play dollar down, despite ominous warnings that April’s jobs horror wasn’t over and that the U.S. economy will be even worse off in the second quarter.
Support pledged by Chinese trade negotiators for the Phase 1 of their trade deal with the U.S. also bolstered sentiment on Wall Street.
Friday’s outreach by trade officials in Beijing to their counterparts in Washington was the first since the deal was ratified in January. It also comes after blame heaped by the Trump administration on China lately for its handling of the coronavirus, including allegedly creating it in a lab.
U.S. gold futures for June settled down $11.90, or 0.7%, at $1,713.90 per ounce as Wall Street’s Dow, S&P 500 and Nasdaq indexes all rose more than 1%, betting on U.S. business reopenings from Covid-19-forced lockdowns.
Despite the drop on the day, June futures for gold were up on the week, rising 0.4%.
Spot gold, which tracks real-time trades in bullion, fell $14.29, or 0.8%, to $1,702.30 by 3:25 PM ET (19:25 GMT).
White House Economic Adviser Larry Kudlow, speaking on Fox Business, said he wasn’t sure if the Q2 jobs picture “is as bad as it gets”.
“I don’t think this pandemic contraction has yet fully run,” Kudlow said.
The consumer-driven U.S. economy shrank 4.8% in the first quarter. While that was already the sharpest decline in a quarter since the 2008/09 financial crisis, economists predict that the current quarter would be worse, as the now mostly-reopened economy was unlikely to show much recovery until the July-September stretch.