In the long term, gold, which has gained about 25% so far this year, is still strong, but is “in need of a deeper correction”
Although equity investors continued their selloff from Thursday, which saw the biggest one-day decline in all major US indices since June, it did not help the investment case for safe-haven assets such as bullion.
“The job report will set the stage for all asset classes,” Saxo Bank analyst Ole Hansen told Reuters. “If the equity markets close on a weaker note after the report, and given the US is heading into a long weekend, we might see some strength in gold.”
Gold’s recent decline has been driven largely by gains in the US dollar coupled with some upbeat data, including robust manufacturing figures from the US and elsewhere, which kindled hopes for a fast economic revival from the covid-19 pandemic.
The dollar index steadied against rivals on Friday, making gold cheaper for those holding other currencies, halting a rally that set the greenback on track for its best week since mid-May.
“Since the recovery, movement in USD has stopped for the moment, that is a positive element for gold,” ActivTrades chief analyst Carlo Alberto De Casa said.
In the long term, gold, which has gained about 25% so far this year, is still strong, but is “in need of a deeper correction,” Hansen added.
(With files from Reuters)
