Gold Steadies Amid Recovery Optimism After U.S. Jobs Report
Gold trading is likely to be muted on Monday as markets in much of Europe, Australia, China and Hong Kong are shut for holidays.
(Bloomberg) -- Gold steadied as investors weighed a better-than-expected U.S. jobs report against a weakening dollar.
Employers in the U.S. added the most jobs in seven months in March, as more coronavirus vaccinations and fewer business restrictions bolstered the labor market recovery. Nonfarm payrolls increased by 916,000 from February, according to a Labor Department report released on Good Friday holiday, when stocks and commodities markets were closed and the bond market closed early.
“The outstanding jump in employment is fueling optimism that growth this year will be extraordinary, boosting both stocks and interest rates, which pulls gold in opposite directions,” Tai Wong, head of metals derivatives trading at BMO Capital Markets, said in an email.
The Bloomberg Dollar Spot Index fell 0.3% and Goldman Sachs Group Inc. dropped its short call on the currency.
Commodity traders are also watching the progress of U.S. President Joe Biden’s $2.25 trillion infrastructure-spending proposal. Republicans, wary of the tax increases needed to fund it, have said they may support a smaller plan.
Still, bullion trading volume remains muted as markets in much of Europe, Australia, China and Hong Kong are shut for the Easter Monday holiday.
Gold prices this year had their first quarterly drop since 2018 as U.S. bond yields rose amid more optimism over the post-pandemic economic recovery. That has caused investors to turn more bearish on the precious metal -- holdings in bullion-backed exchange-traded funds have dropped to the lowest since May, while hedge funds cut net bullish gold bets to a three-week low last week.
“Gold is likely to face an uphill climb -- the global economy is recovering fast,” said Howie Lee, an economist at Oversea-Chinese Banking Corp.
Spot gold was up 0.1% at $1,726.75 an ounce at 2:45 p.m. in New York. Futures for June delivery on the Comex settled little changed at $1,728.80 an ounce. Spot silver, platinum and palladium all fell.
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