By Barani Krishnan
Investing.com - Gold hit all-time highs above $2,080 an ounce in its most-active futures contract in New York before the longs who had relentlessly pushed the shiny metal’s prices up 35% this year paused to await U.S. jobs numbers due Friday for further direction.
Forecasters on Wall Street believe the nonfarm-payrolls from the Labor Department will show a gain of 1.6 million jobs for July, adding to the combined 7.3 million jobs created in May and June. The U.S. economy lost more than 21 million jobs prior to that, between March and April, from business lockdowns forced by the coronavirus pandemic.
A bigger-than-expected growth in jobs and wages for July could bump up the battered U.S. Dollar Index, forcing gold into a correction after its massive move higher since March, when it hit four-month lows of $1,451.00. The index, which pits the dollar against six competing currencies, has fallen from 103.960 in March to a bottom below 92.50 now.
But some research outfits think July’s nonfarm-payrolls report might disappoint those expecting a deep correction in gold.
Separately, the Labor Department reported on Thursday that some 1.2 million Americans filed first-time unemployment claims last week, adding to benefits continuously sought by around 16 million people since the height of disruptions to the U.S. economy caused by Covid-19.
“The question for the day is whether NFP or trade wars will win,” TD Securities said in a note. “We wouldn't read too much into one report. TD looks for a miss on both NFP and wages.”
The front-month October gold futures contract on New York’s Comex settled up $21.30, or 1%, at $2,058.40. Its session peak of $2,070 set an all-new high for a benchmark gold futures contract on Comex.
Comex’s December gold contract, which has attracted even more volume and open interest than October futures, surged to a record high of $2,081.80, before settling at $2,069.49, up $20.10, or 1.4% on the day.
Spot gold, which reflects metal available for immediate delivery, meanwhile, hit a record high of $2,069.68.
If gold moves further up, there are no clear ranges on how high it could go, though some are betting on a $2,150-$2,200 as a near-term target.
“A continued breakdown below 92 on the Dollar Index could trigger a waterfall decline,” AG Thorson, an expert in the study of gold’s technicals, said this week. “In this scenario, gold would likely extend above $2,100 and enter a parabolic rise.”
Market bears, meanwhile, are pointing to a top-heavy bubble-like trade that they say could pop soon despite the dollar cratering on the weight of plunging U.S. 10-year yields and real rates, as well as the issuance of more than $3 trillion in U.S. coronavirus relief funds since March.
In silver, the front-month September contract on Comex settled at $28.400, up $1.51, or 5.6%, on the day after scaling $28.87 earlier, its highest since March 2013. Bulls expect silver to hit $30 by the year-end.
Silver has outperformed gold thus far for 2020, gaining as much as 60% on the year.