Gold Price Outlook: Gold Slammed Lower On Record US Jobs Creation

GOLD PRICE (XAU/USD) ANALYSIS, PRICES AND CHARTS

  • Gold roiled by record US jobs report, higher US Treasury yields.
  • Risk rally continues, but recovery talk may be premature.

GOLD CRUMBLES TO A ONE-MONTH LOW

A record surge in US employment on Friday, June 5 sent gold into a tail spin and back to lows seen at the beginning of May. Just over 2.5 million jobs were added in May compared to market expectations of 8 million lost jobs, the largest month of job creation since the data series began. Last month, the US economy lost just over 20 million jobs. Friday’s positive data boost added to an already upbeat market tone and helped push gold back into the early $1,680 range, its lowest level since May 2.

Gold has been a major beneficiary of a weak dollar and low US interest rates over the last three weeks, and this looks likely to change in the short-term. The yield on the ten-year US benchmark is nearing 1%, up from 0.65% a week ago, dulling the appeal of the precious metal, while the US dollar basket may have found a temporary base around 96.50, after having fallen by four big figures since mid-May.

Risk assets remain in favor despite fears that a range of markets are becoming stretched, weighing on gold, as trader’s prefer to listen to the constant whirling sound of central bank printing presses and ignore heightened political risk. Relations between the US and China continue to sour and look set to get worse, as China’s belligerent behavior in Hong Kong is drawing condemnation from across the globe, while the economic impact of the COVID-19 virus will be felt for years to come. These market negatives are not expected to disappear any time soon, and will underpin gold in the weeks and months ahead.

The daily chart shows a clean break through the dominant uptrend, and a retrace back down to $1,645/oz. appears increasingly likely, before the $1,600/oz. - $1,611/oz. comes into focus. Gold may struggle to break its recent high, but will likely find risk-off bids to underpin itself at these lower levels.

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Laurent Eliane 4 weeks ago Member's comment

If you look carefully, the downtrend is not due to the job market. Already days before, as soon as the NY Comex open, a slam to gold to a certain level. "They " did not want a break over 1750. Period. So 1730,....1710.....and then, big slam in order to divert the investment to..not bonds....no, but Dow, Nasdaq, etc.

The manipulator need the stock exchange to be as healthy as possible even if the fundamental are NOT. It doesn't matter. Is is just a waltdisney show, a wonderland where the few will not join the street but will be able to hire body guard and weaponized assisted house. If the 10 TB is going higher, this means as well that the money does not want to go to TB. If the dollar is loosing its value, same remark.

So don't tell me we are in a complete manipulated war (economic, currencies, sanctions, etc...with little virus just as a kind of show how far we can go)....just for the investigators around, do you remember the Kim jung one NK guy said loud and clear that he will make a present for Trump in Christmas.....No connection? Just China?....

Anyway, this market is made by retail investors (same in Russia)....when the housewife is in the stockmarket,....sell (and what about the saying sell in may and go away, may was a good month..).So, no fundamental so far, just dream, great america again with re problem inside and outside than when it was Obama.....a black president, can you imagine.

David M. Goldstein 2 weeks ago Member's comment

Laurent, what do you think the next couple months will look like?

Laurent Eliane 2 weeks ago Member's comment

Central banks, specially the FED, don't want gold surge and you imagine why.

We don't really know how many papergold there is versus real gold but it is for sure not one to one. Which should not exist.

We have seen the problem of the FED to deliver physical gold to Germany.

So, the secret is well kept, I think, about the real situation of the FED.

And the central banks are unfortunately now run by government.

Swiss central bank is not either in good position as it has to load, and load a quantity of foreign currency (USD and Euro) in order to keep the swiss francs in a comfort zone for exportation.

The tension is getting higher each time we have a "crash" (I mean when investors loose faith!). Like in medical point of view, we call it depression, there is a reason. Everything is done in order WE don't loose faith in the currency or in the economic system.

Capitalism is broken. There is a point of no return as the system has destroyed the middle class. We enter, like in politic, in a fight between the extreme. And like in electricity, to much charge between the positive and the negative lead to a spark, which can be an explosion depending on the environment (mix of gasoline and air for your car!).

So politics know this can lead to revolution and this "tension" will be divert like germany did in the 30th. Instead of having the people fighting each other or taking down the politics in power, they can be "sheeped" to a war, a common enemy.

So, nobody except the leader, want that. We see already the saying "the virus of China, the virus of the communist party of China, etc.

So, to make it short, as long as the central bank are unified in their action, gold will be controlled with buying pressure from Russia and others. I mean others, the ones who knows that the printing will lead, without doubt, to inflation. Not right now, but a few years ahead. It was like that and will be like that.

So gold will slowly keep its track higher as long as our system of capitalism is not changed. I don't think of communism, but a system that will balance consumption with harmony with nature. We see already momentum with this kind of investment.

So, hope the change will not be with fight and revolution or war, but a consciousness that our life depend on just one little ball where we live.

And you can be wherever on the planet, now it is the dollar. But the way it goes, I have some doubt that we can come back to something more physical like gold. Some think of bitcoin (or chinese virtual coin) but you must trust a "computerized" system which can be destroy one way or another.

So, don't bet gold in a couple of months.

Buy physical gold or certificate of physical gold where you can have the delivery of it. This is a long term insurance against the fool who are driving the car and where you cannot do too much about the course.

David M. Goldstein 6 days ago Member's comment

Very thorough answer Laurent, you should comment more often. Always nice to see such thought provoking comments.

DRM 2 weeks ago Member's comment

Answer this! Whether you are holding gold or paper gold, what can you do with it if the entire world economy and every currency of every country collapses to the point of becoming totally worthless, like Germany suffered after WW1? Does your average person have any idea if the "gold" he's offered for his goods or services is real or not and how to value it even if he does? We are too far away from the times when gold dust was exchanged as a currency. When everything goes to s..., you better have something to barter with.

Texan Hunter 6 days ago Member's comment

Yes! I've often thought the same. I mean who has even been to Fort Knox lately to see if any of that gold is still around?

Laurent Eliane 1 week ago Member's comment

a piece of land and some chicken...probably if you are on the right spot and nobody comes grabing your stuff. Just have a look in Zimbabwe and the quantities of holes digged by everybody in order to find little bit of gold for buying bread. It is not WW1 but an economic collapse due to printing...follow the dots.

Craig Newman 2 weeks ago Member's comment

I think Gary Anderson and DRM would probably agree with you.

Gary Anderson 2 weeks ago Contributor's comment

I agree with her. Our desperate government wants to locate missiles in Japan. That can only mean one thing: trouble.

DRM 1 week ago Member's comment

Strap the politicians to the missiles and see if they don't change their minds.

Stock Tigress 6 days ago Member's comment

Lol, good point. I bet you are right about that!

David M. Goldstein 2 weeks ago Member's comment

Well said, thanks for the thorough response, I agree.

Ayelet Wolf 4 weeks ago Member's comment

Very insightful.