Gold Trims Weekly Loss With U.S. Jobs Data Fueling Stimulus Bets

(Bloomberg) -- Gold rose, trimming a weekly loss as the dollar weakened after disappointing U.S. payrolls data supported the case for more economic stimulus.

The U.S. added half as many jobs as expected last month and December figures were revised lower, a U.S. government report showed Friday. The dollar fell for the first time in three days, increasing demand for bullion as an alternative asset. The labor report comes after the Senate voted to adopt a budget blueprint for President Joe Biden’s $1.9 trillion virus relief package.

Gold has slumped this year, with progress on vaccines helping the outlook for a recovery from the coronavirus pandemic and diminishing the appeal of the metal as a haven. Investors are weighing that view against the possibility that further stimulus could weaken the dollar and boost consumer prices, with bullion often used as an inflation hedge.

“Today’s data has reaffirmed the need of another round of stimulus, which is helping the gold price,” said Naeem Aslam, chief market analyst at Ava Trade. “Moreover, the price of gold was way oversold, and this has provided the perfect catalyst for retracement.”

Earlier gains in Treasury yields faded, giving an additional spur for precious metals, which don’t offer interest. Meanwhile, Federal Reserve officials have played down the economic impact of recent stock-market volatility, in the latest sign that the U.S. central bank is not yet close to scaling back its massive monthly bond purchases.

‘Gold-Supportive’

Jonathan Butler, a strategist at Mitsubishi Corp U.K. Plc, said 2021 “will be a year of two halves: the next several months will be marked by a worsening coronavirus situation and associated negative economic impact globally, offset only by further massive fiscal and monetary stimulus.”

“This will make for a gold-supportive macro environment of low yields, a weak dollar and safe-haven investment,” he said in a note.

Still, gold is heading for a second straight weekly drop, and its 50-day moving average is on the cusp of dropping below its 200-day counterpart, approaching a so-called death cross pattern that can signal further losses.

Spot gold rose 1% to $1,811.79 an ounce by 3:13 p.m. in New York, after dropping to $1,785 on Thursday, the lowest intraday price since Dec. 1. It’s on track for a 2% loss this week. Futures for April delivery on the Comex climbed 1.2% to settle at $1,813 an ounce.

Silver for immediate delivery rose 2.1%, steadying after recent market turmoil. The metal became a target of a retail-driven short-squeeze attempt, leading to an early week surge followed by a collapse. Palladium and platinum both gained.

The Bloomberg Dollar Spot Index declined 0.5% after climbing 0.4% on Thursday.

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