Gold prices reclaimed the $1,900 mark on Thursday to post their highest finish in nearly two weeks, with analysts attributing the advance for the yellow metal to less than stellar economic data and traders hedging bets ahead of the important U.S. jobs report on Friday.
“Gold prices are soaring as traders are concerned about the fragile economic data,” said Naeem Aslam, chief market analyst at AvaTrade.
Consumer spending rose 1% in August, but the increase was the smallest since the U.S. reopened, and the Institute for Supply Management said its manufacturing index slipped to 54.6% in September from 56% in the prior month.
The weekly number of Americans who applied for jobless benefits fell to 873,000, the lowest level since the start of the pandemic. However, including an estimated 650,120 people who filed new claims under the Pandemic Unemployment Assistance Act, the actual or unadjusted new claims count was at 1.49 million.
The economic data “confirmed that the economic recovery is running out of momentum and if there is no further stimulus, the recovery will stall,” he told MarketWatch. “This uncertainty is pushing the gold price higher.”
Against that backdrop, December gold GCZ20, +0.87% rose $20.80, or 1.1%, to settle at $1,916.30 an ounce. Prices finished at their highest since Sept. 18 and were poised for a weekly rise of more than 2%.
On Wednesday, gold futures logged a 4.2% loss for September, but posted a 5.3% climb for the third quarter, according to Dow Jones Market Data, tracking the most-active contract.
December silver SIZ20, +1.87%, meanwhile, picked up 76 cents, or 3.2%, to end at $24.254 an ounce on Thursday, after tumbling 3.9% in the previous session. Prices had shed nearly 18% in September, but rallied by 26% for the quarter.
The gold price has also climbed to the $1,900 mark as “investors hedge their bets ahead of the most important economic reading, the U.S. NFP,” Aslam, wrote in an early Thursday note, referring to the nonfarm-payrolls report for September from the U.S. Labor Department due at 8:30 a.m. Eastern on Friday, which could give a snapshot of the health of the employment picture.
Bullion bulls have viewed gold during the coronavirus pandemic as one of the easiest ways to hedge against a host of uncertainty fostered by the public-health disaster that has forced central banks around the world to adopt low-interest-rate policies to limit the harm to businesses.
Concerns about a possible contested presidential election in the U.S. in November, where the loser doesn’t concede defeat immediately and/or the winner isn’t determined on Election Day on Nov. 3, also is seen as a potential catalyst for gold buying.
“The odds are stacked in favor of higher gold price in the coming days, especially because the U.S. elections are just around the corner, and investors want to protect themselves from this major risk event,” Aslam said.
Worries about the U.S. presidential election outcome were reinforced on Tuesday after a closely followed debate between President Donald Trump and challenger former Vice President Joe Biden descended into chaos and acrimony.
A retrenchment of the U.S. dollar after a brisk weekly run-up last week also has helped to buttress the value of assets pegged to the U.S. currency like gold. A weaker dollar can make purchasing dollar-priced gold more compelling to overseas buyers. The ICE U.S. Dollar Index DXY, -0.10% was headed for a weekly slump of 1% after posting a 1.8% advance last week.
Still, for now, “the precious metals markets do not appear to have a large amount of bullish buzz in place, with the very poor performance in the month of September reminding the bull camp of the continuation of the ‘downtrend’ that began in early August,” analysts at Zaner Metals said in daily commentary.
Among other metals traded on Comex declined, with December copper HGZ20, -5.75% losing 5.5% to $2.8655 a pound. Prices fell back after ending at their highest in over a week on Wednesday and posting a third-quarter gain around 11%.