Gold Jumps on Bleak US Jobs Report, Capped by Dollar Strength

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Gold futures settled higher to close out the trading week on a bleak US jobs report, recording a commendable weekly gain. A strengthening US dollar capped the yellow metal’s ascent on Friday. While many would expect gold to surge throughout the global market chaos, there are many factors suppressing the precious metal from trading higher than it normally would in these times.

June gold futures tacked on $10.50, or 0.64%, to $1,648.20 per ounce at 20:06 GMT on Friday on the Comex division of the New York Mercantile Exchange. Gold prices squeezed out a weekly increase of 1.04%, adding to their year-to-date gains of more than 8%.

Silver, the sister commodity to gold, headed in the opposite direction to finish the trading week. May silver futures tumbled $0.16, or 1.1%, to $14.495 an ounce. The white metal posted a 0.85% weekly drop, adding to its YTD decline of 19%.

The US economy lost 701,000 jobs in March, higher than market expectations of 100,000 lost jobs. The unemployment rose from a 50-year low of 3.5% in February to 4.4% – analysts had anticipated a jobless rate of 3.8%. Multiple industries were decimated last month, led by leisure and hospitality, which shed 459,000 positions. This comes after more than 10 million Americans filed for unemployment benefits in the last two weeks as businesses shut down and companies furlough their employees.

Institute for Supply Management (ISM) data showed that the purchasing managers’ index (PMI) for services and composite clocked in at their slowest pace since August 2016.

Global stock markets continue to be volatile as the coronavirus decimates economies and the crude oil market remains unstable. So, why is gold not accelerating? There are two issues at play: supply tightness is easing and the US dollar is strengthening.

Many metal firms have been given the green light to restart operations amid huge demand for gold, which is boosting inventories worldwide.

During the market mayhem last month, the US Dollar Index surged to 105.00. After the Federal Reserve intervened and implemented policies bearish for the buck, the index started slipping below 100. The measurement of the dollar against a basket of currencies has rebounded over the last week, topping the 100 mark and recording a weekly boost of 2.2%.

The consensus, however, is that as long as governments introduce expansionary fiscal policy and central banks pump trillions of dollars of liquidity into markets, gold will eventually glimmer.

In other metal commodities, May copper futures dipped $0.0305, or 1.37%, to $2.19 per pound. May platinum futures declined $6.60, or 0.9%, to $723.40 an ounce. May palladium futures tumbled $19.80, or 0.93%, to $2,101.89 per ounce.

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