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Gold Falls After Positive Jobs Data, London Fix Sparks Selloff

(Bloomberg) — Gold fell from a record as better-than-expected U.S. jobs data signaled the economic rebound is still making headway. Selling was also exacerbated as traders fixed the London gold price lower and the dollar curbed the metal’s haven appeal.

Payrolls rose by 1.76 million in July, beating estimates for a 1.48 million gain, according to data Friday, while the unemployment rate fell more than expected. Prices also weakened as the LBMA gold price was set about $14 lower in the afternoon auction, according to Tai Wong, head of metals derivatives trading at BMO Capital Markets. The dollar headed for its first gain in four sessions amid a deepening rift between Washington and Beijing.

“Precious metals are taking a breather as the U.S. dollar and interest rates marginally recover in the aftermath of the stronger-than-expected jobs report,” TD Securities strategists including Bart Melek said in an emailed note Friday.

Traders set the LBMA gold price at $2,031.15 an ounce in the afternoon auction. The volume of selling outstripped buying by about 90,000 ounces, BMO’s Wong said. The London fix is used to settle contracts between LBMA members and serves as a benchmark by miners, banks and jewelers around the world to trade and value metal.

Bullion fell as much as 2.3%, the most since June, but it’s still up more than 33% this year, putting it on track for the biggest annual gain in over four decades. It’s also poised for the longest stretch of weekly gains since 2006 as the health crisis, negative real rates and geopolitical risks spark a flight to precious metals. Further gains are predicted — Bank of America Corp. reiterated its forecast that gold may reach $3,000 an ounce in 18 months and said it’s “feasible” that silver could hit $35 in 2021.

Spot gold declined 1.6% at $2,031.09 an ounce as of 4:03 p.m. in New York after earlier hitting a record $2,075.47. Prices are still up for a ninth week, while holdings in exchange-traded funds backed by the metal are at an all-time high.

Spot silver dropped as much as 5.3% before trading 2.9% lower at $28.0922. The price earlier advanced to $29.8591, the highest since 2013.

Jobs Report

President Donald Trump signed a pair of executive orders prohibiting U.S. residents from doing business with the Chinese-owned TikTok and WeChat apps beginning 45 days from now. The Treasury Department said Friday the U.S. is placing sanctions on 11 Chinese officials and their allies in Hong Kong.

Elsewhere, negotiations on a virus relief package ended with the White House and Democrats making no headway on resolving their biggest difference, bringing the talks to the brink of collapse. With no deal immediately in the offing, Trump said Thursday he is ready to sign orders extending enhanced unemployment benefits for the jobless and imposing a payroll tax holiday for employers and workers.

Signs that Europe’s biggest economy is finding its feet again may also be putting pressure on bullion. Germany’s industrial output grew slightly more than forecast in June, following figures released on Thursday that showed factory demand was at 90.7% of the level recorded at the end of last year. European Central Bank Chief Economist Philip Lane has cautioned against any premature optimism though, arguing that the region’s third-quarter performance will be key to determining the strength and sustainability of the recovery.

(Updates prices throughout. A previous version of this story corrected price in second deck headline, LBMA acronym and Wong’s description of the sales in the auction in fourth paragraph.)

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