Gold futures rose while flirting with its best performance in nearly two months throughout the week as renewed hopes for a new round of fiscal stimulus from Washington encouraged investors to buy the precious metal. Gains were limited, however, as the U.S. Dollar rose against a basket of major currencies in reaction to the news that President Donald Trump had contracted the coronavirus. The firm U.S. Dollar weighed on foreign demand for dollar-denominated gold futures.
Last week, December Comex gold settled at $1907.60, up $41.30 or +2.21%.
In other important news last week, on Thursday, the number of Americans filing new claims for jobless benefits fell last week but remained at recession levels, while personal income dropped in August, underscoring the need for another government rescue package for businesses and the unemployed.
On Friday, weaker-than-expected job growth in September sent a signal that the sharp economic recovery off the coronavirus shutdown may be hitting a wall.
The Labor Department reported that nonfarm payrolls increased by 661,000 in September, held back by declines in government employment and an exodus of workers from the labor force.
As it stood, the total was a fairly wide miss from Wall Street’s expectation of 800,000. The unemployment rate fell more than expected to 7.9%, but that was mostly due to a sharp decline in labor force participation.
The jobs report was perceived as neutral. The low number suggested a weakening economy, which underpinned the U.S. Dollar, but it also increased the urgency for a stimulus deal, which was supported for gold. The moves offset each other.
Stimulus Bill Remains Key Market Driver
The U.S. of Representatives on Thursday approved a $2.2 trillion Democratic plan for fresh relief from the coronavirus pandemic, though objections from the White House and top Republicans are likely to doom it in the Senate.
After Trump announced his contraction of the virus, House Speaker Nancy Pelosi said Friday that President Donald Trump’s coronavirus diagnosis could change the shape of talks toward an evasive stimulus deal.
“This kind of changes the dynamic because here (Republicans) see the reality of what we have been saying along. This is a vicious virus,” the California Democrat told MSNBC, adding that she would pray for the president’s safety.
Trump’s positive COVID-19 test will move gold prices but only to the extent that it affects the U.S. Dollar. If investors decide that the dollar is the best safe-haven asset at this time then gold prices could weaken.
Gold could find some support if Republican senators heed the advice of Trump tpass the stimulus deal. The market could attempt a rally, but gains may be limited by the stronger dollar.
President Donald Trump pressured Congress to pass a coronavirus stimulus plan Saturday as his administration and congressional Democrats struggle to forge a relief deal.
In a tweet sent as the president receives treatment for COVID-19 at Walter Reed Medical Center, the president wrote, “OUR GREAT USA WANTS & NEEDS STIMULUS.”
“WORK TOGETHER AND GET IT DONE. Thank you!” he continued.
Continue to watch the movement in the U.S. Dollar rather than trade the headlines.
For a look at all of today’s economic events, check out our economic calendar.