SEEKING ALPHA/Clif Droke
Gold’s Safety Factor Is As Strong As Ever
“A new bull market in equities has removed some of the sheen from gold, leaving some to wonder if the gold bull is dying. But while worries over the U.S. economic outlook are dwindling, worries over U.S. and global social unrest have emerged to keep gold’s safety factor intact. At the same time, continued central bank stimulus is keeping interest rates low, which in turn bodes well for gold’s intermediate-term outlook. Here we’ll take a closer look at the main evidence which supports higher yellow metal prices this summer.
The last few weeks have tested the patience of gold investors, as the precious metal fell 4% below its April high and went nowhere in May. Gold’s price peak occurred at around the same time as the height of the coronavirus panic, and safety-related gold interest subsequently waned as investors’ risk appetite increased and equity prices rebounded.”
Will Great Unlock Push Gold Prices Down?
“As Great Lockdown was positive for the gold prices, the Great Unlock will be bad, right? We invite you to read our today’s article about the Great Unlock and find out whether it really must be negative for the gold prices.
It’s all government’s fault, right? After all, the Great Lockdown was introduced by the federal and state governments introduced, wasn’t? Well, not quite.
Before I will explain why, let me clear one thing up: I’m a liberty lover and I’m skeptical about the government regulations. And the economic shutdown was obviously untenable – the only reason to shut down the economy was to buy some time to prepare the healthcare system for better handling of the epidemic. So, it’s good that the Great Lockdown is ending.”
Gold price drops as U.S. economy creates 2.5 million jobs in May
“The gold market has been unable to hold support around $1,700 an ounce and struggling to find positive momentum after the U.S. economy surprisingly added jobs last month.
Friday, the Bureau of Labor Statistics said 2.5 million jobs were created in May. The data significantly beat expectations; according to consensus forecasts, economists were expecting to see job losses of around 7.75 million.
New life is being breathed into the U.S. economy as states start to ease nearly two-month lockdown measures that were put in place to slow the spread of the COVID-19 pandemic.
“These improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it,” the report said. “In May, employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade.”
Gold falls as risk appetite grows; focus on US jobs data
“Gold fell and was on track for a third straight weekly decline on Friday, weighed down by gains in riskier assets as investors grew more hopeful of a rebound in the coronavirus-hit global economy.
Spot gold was down 0.3% at $1,705.73 per ounce. U.S. gold futures fell 1.2% to $1,707.30.
Bullion has declined 1.2% so far this week, on track for its biggest fall since the week ending May 1.
“The European Central Bank’s move yesterday is supporting risk-taking …. It seems more investors holding gold are switching out to the equity market,” said UBS analyst Giovanni Staunovo.
“I still see gold moving in a $1,700-$1,750 range for the time being.”