Gold Prices Gain On High Sell-Offs Recorded in Global Stocks
Gold prices rebounded on Friday at Asia’s trading session. This was as the recent retreat in the value of the U.S. dollar and high sell-offs recorded in global equities lifted demand for the safe-haven metal.
Gold futures at the time this report was drafted gained 0.27% to $1,943.
A top U.S Federal Reserve official, yesterday called on the U.S Congress to deliver more fiscal support and signaled that U.S. monetary policy could be more accomodating, meaning very low-interest rates would be kept for a longer period of time in order to stabilize the world’s largest economic recovery to its pre-pandemic strength.
What you must know about gold: The precious metal tends to usually rise in value on expectations of lower U.S interest rates, which reduces the opportunity cost of holding non-yielding bullion. Also, it usually rallies up, when the U.S dollar shows weakness.
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to newsrooms, spoke on the all-important macro that traders are presently awaiting on—the US non-farm payroll.
“The US non-farm payroll (NFP) data for August will be necessary. If the number disappoints, as the ADP number on Wednesday did, gold could rally.
“Longer-term support remains from the inflation targeting, but we need inflation to pick up, and as you can see by the sell-off in commodities, that is not happening right now. So that remains a longer-term view.
“On balance, I see minimal upside for gold in the short term, especially with positive vaccine news in the air and short of an abysmal job number.”
Geopolitical concerns will continue to support the longer-term need for gold, but possibly not at these levels.