Gold Drops With Jobs Data Bolstering Bet on Easing Virus Impact
Gold Slips After U.S. Payrolls Drop Was Less Than Projected
(Bloomberg) -- Gold futures slid after U.S. payrolls fell less than economists had expected, reducing demand for the metal as a haven asset.
While government report Friday showed U.S. employers cut 20.5 million workers in April, propelling the jobless rate to its highest since the Great Depression, it fell short of estimates for a loss of 22 million jobs. Equity futures and yields on 10-year Treasuries rose.
Bullion has come under pressure recently as some government officials push for states to begin reopening their economies, fueling market optimism that the worst of the fallout from the coronavirus is over. Still, April’s employment losses erase roughly all of the jobs that the economy had added in this past decade’s expansion and lay bare just how precarious employment is for vast swaths of Americans.
“The initial takeaway is that the unemployment rate was less bad than the expectations,” Naeem Aslam, chief market analyst at Ava Trade, said in an email. “The initial move in the gold price was to the downside but one needs to keep in mind that the U.S. unemployment rate is incredibly high.”
The metal for June delivery fell 0.7% to settle at $1,713.90 an ounce at 1:32 p.m. on the Comex in New York.
“Now that the number wasn’t as bad as expected, gold’s just taking a breather,” Phil Streible, chief market strategist for Blue Line Futures LLC, said by phone of the unemployment figure.
The metal is a non-interest bearing asset that can be sought after during periods of intense market volatility, and it typically benefits in periods of low U.S. borrowing costs and negative real rates. Last month, Bank of America Corp. forecast that bullion could rally to as much as $3,000 an ounce.
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